HSBC Fined £6.3 Million by UK Watchdog Over Arrears Failings

BySamson Ononeme

May 23, 2024 ,
HSBC was fined £6.28m by the FCA over deficient policies that led to unfair treatment of 1.5m customers who fell behind on payments during 2017-2018.

Key Insights

  • The UK’s FCA fined HSBC £6.28 million for failing to properly consider customers’ circumstances when they fell into arrears or financial difficulty between 2017-2018.
  • HSBC sometimes took disproportionate action against customers in arrears, risking pushing them into greater financial hardship.
  • HSBC has paid £185 million in redress to over 1.5 million affected customers and invested £94 million to address the failings.

LONDON (MarketsXplora) – Britain’s financial watchdog has fined HSBC £6.28 million ($7.9 million) for failures in how it treated hundreds of thousands of customers who fell into arrears or financial difficulty.

The Financial Conduct Authority (FCA) said on Thursday that between June 2017 and October 2018, HSBC did not properly consider people’s individual circumstances when they missed payments on loans and credit cards.

As a result, HSBC failed to always carry out appropriate affordability checks before agreeing repayment plans to allow customers to defer or clear outstanding balances, the FCA said.

In some cases, the bank took “disproportionate” action against those behind on payments in a way that risked pushing them into greater financial hardship, it added.

The failings stemmed from deficiencies in HSBC’s policies, procedures and staff training, as well as inadequate controls to identify and address instances of unfair customer treatment, according to the FCA.

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HSBC self-reported the issues to the regulator in 2018 after detecting problems in how it engaged with customers in arrears.

It has since paid out £185 million in redress to over 1.5 million affected customers and invested £94 million to remediate the failings.

“People must be able to trust their lenders to treat them fairly when in financial difficulty,” said Therese Chambers, an FCA enforcement director. “By failing to do so, HSBC put 1.5 million people at risk of greater financial harm.”

While praising HSBC for proactively addressing the matter, Chambers added the costs incurred “should be a warning to all lenders” on the need to properly understand customers’ circumstances.

HSBC was granted a 30% discount on its fine for settling the case early, the FCA said. Without this, the penalty would have been nearly £9 million.

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A HSBC spokesman said: “We are grateful to the FCA for recognizing our efforts to address this situation and make fair remediation.”

Samson Ononeme

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