Charities embroiled in HSBC mis-selling scandal
The Firststop Advice service, which was set-up in 2005 to offer the elderly free independent information on care home provision, earned money by promoting the NHFA on its website and encouraging the public to use its service.
It is understood NHFA paid numerous UK charities and care advice websites for customer leads so its advisers could boost their commission by selling investments. Age UK admitted it had made money by passing customer details to the now defunct advice firm.
On Monday, HSBC was fined £10.5m by the Financial Services Authority (FSA) after an investigation found 2,485 people were mis-sold investments by NHFA. The FSA said "a sample of [NHFA] customer files found unsuitable sales had been made to 87% of customers". This is the largest fine the FSA has ever issued in the retail sector.
The disgraced firm targeted the old, where the average customer age was 83, and sold asset-backed investments to fund long-term care. These products are usually recommended for a minimum period of five years but in many cases this exceeded the life expectancy of the elderly client. Some products only paid out after the customer had died.
In addition to the fine, HSBC expects to be hit by a further £29.3m payout in compensation to customers duped by NHFA. HSBC closed the business in July 2011.
This scandal has now raised questions on how UK charities for the elderly and retired such as Saga and Age Concern sell financial services products and whether the models in place are transparent enough.