From the Ed: One email, one collective gasp…

Journalists are known for being hard to shock. But there was genuine surprise in the office on Monday this week...

Shortly after 10:30am, an FSA email arrived with details that HSBC – one of the world’s largest banking conglomerates (and my bank of choice) – had been fined £10.5m because one of its subsidiaries had mis-sold investment bonds to the elderly.

And not just a few bonds either, but almost 2,500 of them to customers with an average age of 83, all sold within the six years to July 2010. Here’s the rub: In many cases, the five-year investment period for the bonds was longer than the individual customer’s life expectancy.

It isn’t the first time the FSA has issued a fine against a bank, nor is it even the FSA’s largest ever fine, but Monday was the first time I’d heard a collective gasp in the office.

There has been an element of buck-passing since news of the fine (HSBC will also pay out some £30m in customer redress) came to light.

The bank put out a statement on Twitter saying the majority of NHFA advisers were self-employed IFAs who did not advise on any HSBC products or services.

Meanwhile, an anonymous former NHFA adviser, posting a comment online, said he had never knowingly indulged in mis-selling and had, in the majority of cases, sold policies to people who lived long enough to see the benefit.

His comments were echoed by Tom Scott, a former adviser at NHFA, who said the mis-selling was conducted by a small band of individuals who were able to carry out their work undetected.

So where does the responsibility lie?

Although details of this activity came to light following an internal review prompted by HSBC, responsibility must surely lie with the bank. HSBC owned the company and profited from its activities (NHFA closed to new business in July this year).

Speaking following the acquisition of NHFA in July 2005, Tony Hope, group general manager of HSBC Insurance, said: “HSBC has identified a need to develop its service offering for long-term care. The acquisition of NHFA, the leading practitioner in the UK market, brings HSBC a new range of services.”

Surely it was the bank’s job to realise the purchase brought with it a new range of responsibilities to the most vulnerable members of society too.