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The Financial Conduct Authority (FCA) has imposed a fine of £6,280,100 on HSBC Bank plc, HSBC UK Bank plc and Marks and Spencer Financial Services plc (collectively referred to as HSBC) for their mishandling of customers in arrears or experiencing financial hardship.
Key Issues Identified
Between June 2017 and October 2018, HSBC was found to have inadequately assessed the financial situations of customers who had missed payments. The bank failed to perform appropriate affordability assessments when negotiating arrangements to reduce or clear arrears. Additionally, HSBC sometimes took disproportionate actions against customers who were behind on payments, potentially exacerbating their financial difficulties.
Root Causes
The FCA identified several root causes for these failures, including:
- Deficient Policies and Procedures: HSBC's existing policies and procedures were insufficient to ensure fair treatment of customers in financial difficulty.
- Inadequate Staff Training: Staff were not adequately trained to handle situations involving customers in arrears, leading to improper assessments and actions.
- Poor Monitoring and Rectification Measures: HSBC lacked effective measures to identify and address instances of unfair treatment promptly.
HSBC's Response
In 2018, HSBC acknowledged the issues related to their handling of customers facing financial difficulties and proactively reported these to the FCA. To rectify the situation, HSBC invested £94 million to identify and address the underlying problems. Additionally, HSBC issued redress payments amounting to £185 million to over 1.5 million affected customers.
