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HSBC Fined £6.2M by FCA for Failing to Properly Treat Customers in Financial Difficulty

2024-05-24 Brokersview

The Financial Conduct Authority (FCA) announced that it has imposed fines of £6,280,100 on HSBC UK Bank plc, HSBC Bank plc, and Marks and Spencer Financial Services plc (HSBC) for their 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 missed payments. This meant that HSBC did not always carry out correct affordability assessments when entering into arrangements with people to reduce or settle their arrears. Sometimes HSBC took disproportionate action when people fell behind with repayments, which risked people getting into greater financial distress.


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 totaling £185 million to over 1.5 million customers.  


“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, “ said Therese Chambers, Joint Executive Director of Enforcement and Market Oversight.


“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 took HSBC's remediation and redress plan into account in determining the fine. HSBC also agreed to settle the case and was eligible for a 30% discount on the fine, which would otherwise have been £8,971,600.