MSE News: HSBC to pay £40m for mis-selling to the elderly

edited 8 December 2011 at 5:58PM in Savings & Investments
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  • edited 7 December 2011 at 10:42AM
    SnowManSnowMan Forumite
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    edited 7 December 2011 at 10:42AM
    Beacon_123 wrote: »
    You rightly say that I only mentioned the difference between lifetime annuities and investment bonds. Unfortunately there is not enough room on these blogs to detail every single word of the 30 odd pages of report which was sent to client outlining the options available and how they were broken down. We always recommended that cash was retained in a high interest account but try getting an account paying a decent enough amount of interest using a power of attorney which most people used. One option we always gave our clients was to put the money on deposit....it was their choice if they did not take that option, not ours. We did recommend ISAs but how far would £3000 go towards a months care fees? Not very far. An Stocks and Shares ISAs? The name speaks for itself. However, if that is what the client wanted they were free to exercise that choice.

    About time the press got their facts straight.

    The word 'savings' would only have required one word to type. It is hard to defend putting clients in investment bonds rather than 'savings' without mentioning that single word, but fair play to you you managed it :rotfl::T

    You are still struggling to explain why so many clients ended up in investment bonds rather than in savings. I can't see many clients saying 'no no I refuse to go for savings when I can have one of those lovely investment bonds, I love the idea that withdrawals and product charges will lead to a faster reduction of capital than would be the case with savings, and I love the idea that I won't be able to easily access the money to pay the care fees when I want to'.

    The appropriate advice for a client with a 3 year life expectancy (not choosing a lifetime annuity) would ordinarily have been to place the money in appropriate savings. Initially the first chunk would go to cash ISAs (I did not mention stocks and shares ISAs in my earlier post by the way) and the rest to other savings.

    I would have thought that NHFA would have kept a list of the best paying accounts which accepted power of attorney and be well versed in taking your clients through the practicalities of opening such accounts. Apparently not from what you say. Another indication that the default option was investment bonds not savings.

    Out of interest how much commission did you get if you told the client to invest in savings accounts and how much commission did you get for selling investment bonds?

    Not a fan of inaccurate press reporting of course but they seem to be reporting (and I can't comment on tabloids as I don't read them) fairly accurately what the FSA have said in that link I gave. So your disagreement seems to be with the FSA investigation as far as I can see.
    I came, I saw, I melted
  • edited 9 December 2011 at 1:19PM
    2sides2everystory2sides2everystory
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    edited 9 December 2011 at 1:19PM
    Just received this email:
    Come and talk to
    our financial
    advisers

    Get your investment questions answered
    Appointments available now

    Call 08457 404 404* to book

    Dear 2sides,

    With recent events in the news and uncertainty about the European economy, now might be a good time to check that the investment choices you've made are still right for your personal circumstances.

    At HSBC, our financial advisors are here to help you with your investment decisions. There are still appointments available before Christmas, so call us on 08457 404 404* or visit your local branch to arrange your appointment today.

    Your financial appointment:
    Takes about 30 minutes;
    Is held in the branch of your choosing
    Is all about the things that matter to you.
    Book an appointment today

    The value of investments and any income received from them can fall as well as rise and you may not get back the amount you invested. Most investments should be considered as a medium to long-term commitment, meaning you should be prepared to hold them for at least five years.

    We look forward to helping you with your investment decisions.


    I am not sure why they put the word advisers in bold red. Maybe there is to be a culling, or a bloodbath like the one at Barclays?

    I especially liked their opening line "With recent events in the news ... " and their last ... Dream On HSBC!
  • edited 10 December 2011 at 3:54PM
    SnowManSnowMan Forumite
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    edited 10 December 2011 at 3:54PM
    SnowMan wrote: »
    Out of interest how much commission did you get if you told the client to invest in savings accounts and how much commission did you get for selling investment bonds?

    As you haven't answered BeaCon, I'll go off the commission figure on radio 4's moneybox today of 8%.

    So for the average investment of 115K (mentioned in the report). That makes a staggering commission payment for advising the investment bond of £9,200 per customer (115K x 0.08).
    Beacon_123 wrote: »
    Greedy salesmen?
    Yep
    I came, I saw, I melted
  • dunstonhdunstonh Forumite
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    So for the average investment of 115K (mentioned in the report). That makes a staggering commission payment for advising the investment bond of £9,200 per customer (115K x 0.08).

    I would have thought the company was taking the full indemnified initial at 7% (i.e. all paid up front with no trail). Banks and salesforces nearly always did it that way. It doesnt mean the reps got that though. They may have seen as little as 1.5% (based on other salesforces run by banks) or had some hybrid scheme that is based on level of business brought in but not directly linked to commission.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • HI,
    I am a new poster, so hopefully I have put this in the right place.
    I was just wondering what people thought about this scandal and the redress that HSBC has paid?

    I ask as I am personally involved as an investor who was miss-sold an investment and has now received a letter regarding compensation.

    Thanks for all who reply.

    P
  • le_louple_loup Forumite
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    Jolly bad practice ... but much of it was done with the full knowledge of the clients as it was a ruse to avoid IHT.
    Jolly good that HSBS recognised the problem and paid restitution.
    Not all older people are doolally.
  • I am not sure about inheritance tax, and certainly not in our case as the amounts were not above the IHT threshold, so wouldn't have really mattered.

    Just bad advice really I guess to make money at the expense of others. How would one know if the amount of redress payment made is appropriate and does in fact take one back to the position they would have been in if the inappropriate advice was not given, or more appropriate advice given to match the risk level that we requested at the outset.
    The gist of why we were awarded redress was due to no ISAs were recommended (ordinary or stock and shares ISA), and that above 30% was invested in property (this was in 2006).
  • le_louple_loup Forumite
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    When everybody and his dog was investing in that "never loses money investment"; property. Any IFA would have recommended 20% - 40% in property. Some of us thought that was madness ... it was.
  • dunstonhdunstonh Forumite
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    The reason that they would have done investment bonds is to keep money out of the means test and/or reduce IHT liability. Typically the former.
    The gist of why we were awarded redress was due to no ISAs were recommended (ordinary or stock and shares ISA), and that above 30% was invested in property (this was in 2006).

    I've put complaints in on the ISA basis before and won. ISAs are first in the pecking order. Unwrapped or investment bonds come next.

    The interesting thing is that the complaint outcome on your case doesnt appear to reflect what the company were fined for. i.e. had they used the ISA allowance and reduced the allocation on property to a more suitable under 20% figure, then there would not have been anything wrong.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • They were also invested in bonds which had the 5 year limited withdrawals, so i guess this fact and the fact that they invested in incorrect products given our attitude to risk was the basis for the redress payment.

    I suppose you are right about the fact that if they had advised on ISAs and had invested in less than 30% property they would not have done anything wrong. However they didnt, and they did, therefore was incorrect advice.

    I would imagine that all the facts are never given in newspapers and the like, and they (HSBC) know that they did other things wrong, and are making redress for these, unreported facts as well.
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