Financial Advisors Negligence : FSA Fine HSBC:
Financial Advisors Negligence : FSA Fine HSBC:
The Financial Services Authority (FSA) has fined HSBC Bank plc 10.5 million pounds. The fine arose out of unsuitable investment advice given by a subsidiary of the bank NHFA. NHFA were providing advice on care products for the elderly.
After a recent audit of the company HSBC found concerns and reported the matter to the FSA. Customer file reviews found 80% of sales unsuitable and in breach of Principle 9 of the FSA rules.
Principle 9 requires:
- “A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgement.”
An investigation found that many of the client’s were too old, the average age being 83 to benefit and also many were canceling the product and as a consequence losing any investment growth.
The FSA gave HSBC given credit for notifying the regulator and as a consequence the fine was reduced.
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