The Financial Conduct Authority (FCA) has fined HSBC UK Bank plc, HSBC Bank plc, and Marks and Spencer Financial Services plc (HSBC) a total of £6.2m.
The FCA imposed the fine due to shortcomings in how HSBC handled customers that were facing financial difficulties or struggling to make payments. In the regulator’s announcement, it specifically mentioned a period between June 2017 and October 2018, in which HSBC failed to properly consider people’s circumstances when they had missed payments.
In detail, this translates to HSBC’s failure to consistently conduct appropriate affordability assessments when negotiating repayment plans with customers to alleviate or eliminate their outstanding debts.
Additionally, the FCA found that the bank occasionally resorted to excessive measures when customers missed payments, potentially worsening their financial challenges.
Therese Chambers, Joint Executive Director of Enforcement and Market Oversight, said: “People must be able to trust their lenders to treat them fairly when in financial difficulty. By failing to do so, HSBC put 1.5 million people at risk of greater financial harm.”
HSBC’s shortcomings stemmed from inadequacies in its policies, procedures and staff training, along with insufficient mechanisms to detect and rectify instances of unfair customer treatment.
In 2018, HSBC recognised errors in its approach to assisting customers facing financial challenges and reported these concerns to the FCA. Subsequently, the bank allocated £94m toward identifying and rectifying these issues. Furthermore, HSBC disbursed £185m in redress payments to over 1.5 million affected customers.
The FCA has stated that it has taken HSBC’s remediation and redress programme into account when setting its fine. The bank also agreed to settle the case and qualified for a 30% discount to the financial penalty imposed, which would otherwise have been £8.9m.
Chambers concluded: “It deserves credit for identifying the issue and putting it right. The cost it has incurred in doing so, however, should be a warning to all lenders that they need to understand their customers’ circumstances so as not to make a bad situation worse.”
