HSBC extends compensation to more NHFA customers

| December 9, 2011 | 0 Comments
HSBC extends compensation to more NHFA customers

Following the recent revelation that HSBC subsidiary NHFA mis-sold asset-backed investment products to elderly people in care, HSBC has promised to consider complaints dating back to before it took over NHFA in 2005.

The decision means that HSBC could face thousands more potential claims for compensation, adding to the £30m compensation bill it already expects to pay.

NHFA mis-sold the investment products to elderly people or their representatives, who bought the products to fund their care costs.

In total this group of customers invested around £285 million – representing around £115,000 each.

The average age of NHFA’s customers was around 83 years and in some cases their life expectancy fell below the recommended five-year investment period.

This meant that withdrawals had to be made too soon and this, together with product charges, led to investors’ capital being reduced faster than it would have been if more suitable products had been recommended.

HSBC has now promised to accept complaints dating as far back as 1991.

Brian Robertson, chief executive of HSBC Bank, said: “We will take responsibility for all NHFA customers - including those from before HSBC bought the company in 2005 - to ensure that this issue is entirely resolved.

“I am profoundly sorry about what happened at NHFA and it is only right and proper that we stand fully behind these customers,” he continued.

Banks have been involved in a number of mis-selling scandals recently, one of the most far-reaching cases being the mis-selling of payment protection insurance (PPI).

Last month the Financial Ombudsman Service revealed that complaints about PPI mis-selling had increased to 300,000 with average compensation payouts nearing £3,000.

The FOS said it might have to employ more staff to cope with the level of complaints it was receiving.

Tags: care homes, elderly investors, , , NHFA,

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