Nursing Homes Fees Agency, the now defunct subsidiary which triggered HSBC’s record £10.5m fine from the FSA this week for misleading elderly savers, had links to charities including Help the Aged and Counsel and Care.
The charities and the agency secured funding in partnership from the Big Lottery Fund, to set up an advice service for the elderly in care.
This week, HSBC was fined a record £10.5m by the Financial Services Authority (FSA), as its former subsidiary Nursing Homes Fees Agency (NHFA) had mis-sold financial packages to nearly 3,000 elderly customers living in care.
The FSA said that NHFA had advised the customers, with an average age of 83, to buy into five-year bonds to fund their care, even though many of them were likely to die before the investment term was up.
Around nine out of 10 of these customers, who on average invested £115,000, were deemed ‘unsuitable’ for the product by a third-party review, the FSA said.
An HSBC spokesman said NHFA, which it had bought in 2005, was completely separate to the bank and did not sell HSBC products. HSBC reported NHFA in 2009 to the FSA.
NHFA is now closed for business. Along with its £10.5m fine from the FSA, HSBC is expected to pay £29.3m in compensation to customers.
Help the Aged referred customers to NHFA
NHFA had close ties to charities for the elderly, including Help the Aged – now Age UK since its 2010 merger with Age Concern.
Michelle Mitchell, charity director of Age UK, said: “Help the Aged had a relationship with the Nursing Home Fees Agency from 2003 until 2009 in which it acted as an introducer for the NHFA. The NHFA also ran a care-home fees advice line and offered an equity release product on behalf of Help the Aged.
“Help the Aged did not advise potential customers or have any input in investment decisions. The contract was reviewed as part of the Age UK merger process and it was decided to terminate the contract.
“NHFA was a major adviser in the area of funding care-home fees and was trusted by many including Help the Aged. We are urgently reviewing the findings to see if today’s announcement affects Help the Aged customers and how we can help them access compensation from HSBC.”
Further, charities Help the Aged, Counsel and Care (now Independent Age since a merger this year) and Elderly Accommodation Counsel launched an advice and information service for the elderly in care in 2008 in partnership with NHFA.
FirstStop was launched with seed funding provided by the Big Lottery Fund in 2008. Its website also states it got further funding from the Department of Communities and Local Government, but it’s unclear whether NHFA, which is no longer a part of FirstStop, was still a partner at the time.
Chief executive of Independent Age, Janet Morrison, said: “It is distressing to find out that a leading supplier of independent financial advice on long-term care has failed to provide a reputable service to some of the most vulnerable in society. We welcome the regulator taking action to fine those responsible.
"In October, we merged with Counsel and Care and their advice line service now comes under our management. We did a significant amount of due diligence during the merger and are aware that the advice service had a contract with FirstStop to provide advice until it was terminated in 2010. NHFA was one of the founder partners of FirstStop.
"Between April 2010 and March 2011, Counsel and Care had a service agreement with Elderly Accommodation Counsel who took over the FirstStop service to respond to care and support enquiries and provide information fact sheets."
The Royal British Legion had also listed NHFA on its website as an advice service for the elderly, along with other companies.
HSBC is now contacting customers of NHFA who it believes were mis-sold products. Some have now died, so their next of kin will be recompensed, said a spokesman.
“We are sorry this happened,” he said. “And we are working with the FSA to put this right.”
