My friends at the FSA

The clowns at the FSA have published their latest report on borderline criminal financial advice given, in this instance, by HSBC advisors to elderly retirees in nursing homes.

You'll note that it's the HSBC entity paying the fine, not any of the scumbag advisors who were, presumably, paid on commission and have now moved on to non-HSBC jobs safe from retribution. You'll also note that all of the advisors would have to have been FSA-certified as fit and proper persons to offer investment advice.

As the summary says:

The advice and sales were unsuitable because in a number of cases the individual's life expectancy was below the recommended five-year investment period. As a result customers with shorter life expectancies had to make withdrawals from these investments sooner than is recommended. The combination of withdrawals and product charges led to faster reduction of capital than should have been the case if customers had received the right advice. A review by a third party of a sample of customer files found unsuitable sales had been made to 87% of customers involving these types of investments.

An unsuitability rate of 87% isn't accidental. That's a planned and focused campaign. It may not have been HSBC management planning the details, but they sure as heck didn't do much checking on suitability as the money rolled in. The entity doing the dirty deed was NHFA - acquired by HSBC but separately regulated for most of the period in question.

The Companies in the UK website helpfully lists the directors of NHFA up to 2010 showing the office in Eynsham just outside Oxford. Picking one scumbag at random, it seems that Andrew Cheesewright is now at First Direct Investments and one can only speculate at what guidance he is giving to the sales force there.

For all the sound and fury of the FSA's announcements, there are still 2000+ pensioners who have been ripped off by NHFA (and, by proxy, HSBC) with no comeback to those who made the mis-selling. It is hard to see how, in the circumstances, the FSA can claim to be an effective regulator of financial advisors. One wonders how much further their performance could degrade given, say, a 40% cut in their funding and immediate ending of any final salary pension scheme for their members.

Update: (6/11/11) the Daily Mail actually performs a public service and goes after the directors of NHFA. Good on them

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