Britain’s financial regulator has fined HSBC a record 12.2 million euros for mis-selling investment plans to elderly customers.
The products were intended to cover the cost of staying in retirement homes but they were unsuitable because of the advanced age of most of those who bought them.
Europe’s biggest bank is likely to pay another 34 million euros in compensation to those customers.
The Financial Services Authority said an HSBC subsidiary gave inappropriate investment advice adding: “This type of behaviour undermines confidence in the financial services sector.”
The FSA said 2,485 customer were advised to invest in the products, and unsuitable sales had been made to about 87 percent of them.
It is the biggest-ever fine for a retail banking offence.
“This should not have happened and I am profoundly sorry that it did,” said Brian Robertson, chief executive of HSBC’s UK business. “We are undertaking a full review of the advice given to impacted customers and I can guarantee that every customer who is found to have not been treated fairly will not be disadvantaged.”
The fine comes at time of low public trust of banks following the financial crisis, which required taxpayers to bail out lenders in several countries. In Britain, banks are also having to pay billions of pounds to compensate customers wrongly sold payment protection insurance (PPI), which allowed borrowers to keep up debt repayments in case of loss of income.