British banking giant HSBC has set aside £93 million (US$149 million) to review investment advice given to customers between August 2008 and October 2012.
Around 200,000 customers who were potential victims of misspelling could be in line for compensation following a mystery shopping exercise by investigators from the UK’s Financial Conduct Authority (FCA).
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The review is scheduled to start next May. This is the second time HSBC has been reprimanded for mis-selling investments by the regulator.
HSBC hired Grant Thornton to review its sales.
As part of the review, HSBC will ask the customers whether they were happy with the advice or if they would like the advice reviewed as well as those who are unsatisfied could receive compensation.
The 200,000 customers who bought investment products after taking advice from advisers will be written to in a compliance programme starting next year.
The bank said that the final compensation figure is unlikely to be high because stock markets rose across the period under review, so even customers who were poorly advised may not be out of pocket.
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By GlobalDataAccording to HSBC, any compensation or operational costs would add to more £20 million for advice given and a review of the outcome of the investments. The 1,000 HSBC advisers who sold investment products will now become IFA’s and focus on HSBC’s wealthier premier customers.
HSBC CEO Stuart Gulliver said about US$120 million of the money set aside will pay for the cost of its review.
Gulliver said the investigation was still in its ‘very early days’ and that all the traders identified by regulators are no longer working at the bank.
