The Financial Conduct Authority (FCA) has fined HSBC UK Bank plc, HSBC Bank plc and Marks and Spencer Financial Services plc (HSBC) £6,280,100 for failures in its treatment of customers who were in arrears or experiencing financial difficulty. Between June 2017 and October 2018, HSBC failed to properly consider people’s circumstances when they had missed payments. This meant it did not always do the right affordability assessments when entering arrangements with people to reduce or clear their arrears. Sometimes it took disproportionate action when people fell behind with payments, which risked people getting into greater financial difficulty. The failings were caused by deficiencies in HSBC’s policies and procedures and the training of their staff, as well as inadequate measures to identify and address instances of unfair customer treatment.
In 2018, HSBC identified that there were issues with their handling of customers in financial difficulty and notified the FCA. HSBC invested £94 million in identifying the issues and putting them right. HSBC also issued redress payments totalling £185 million to over 1.5 million customers.
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. 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.”
The FCA has taken HSBC’s remediation and redress programme into account when setting its fine. HSBC also agreed to settle the case and qualified for a 30% discount to the financial penalty imposed, which would otherwise have been £8,971,600.
The FCA has found that HSBC breached Principle 3 and Principle 6 of the FCA’s Principles for Businesses between 1 June 2017 and 31 October 2018. The Consumer Credit sourcebook (“CONC”) is the specialist sourcebook for credit-related activities, and it forms part of the Handbook. The relevant provisions of CONC are CONC 7.2.1R, CONC 7.3.4R and CONC 7.3.14R. The Mortgages and Home Finance: Conduct of Business sourcebook (“MCOB”) is the specialist sourcebook for mortgage and home finance activities, and it forms part of the Handbook. The relevant provision of MCOB is MCOB 13.3.2A.
