FCA Fines HSBC £6.2 Million for Mishandling Financially Vulnerable Customers

The Financial Conduct Authority fined the Hong Kong Shanghai Banking Corporation (HSBC) and Marks and Spencer Financial Services plc(HSBC) £6,280,100 for mishandling and mistreating customers who were financially vulnerable.

The FCA has asserted that Between June 2017 and October2018, HSBC improperly considered the circumstances of customers when they had missed payments.  According to the FCA,HSBC failed to conduct adequate affordability assessments when entering arrangements with customers to reduce or clear their outstanding balances.

The FCA further stated that the bank took disproportionate action when customers fell behind with payments, which risked putting its customers in a position of greater financial vulnerability. The agency stated that the banks failures were due to deficiencies in HSBCs policies, procedures, and poor training of personnel as well insufficient measures to identify instances of improper customer treatment.

HSBC has repeatedly come under scrutiny for its handling of customers.  Similar occurrences in 2018led to the bank investing £94 million in identifying and remedying customer mishandling issues as well as paying out over £185 million to over 1.5million customers to remedy errors.

Therese Chambers, Joint Executive Director ofEnforcement and Market Oversight stated amid the FCA action, “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 took HSBC’s remediation actions 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. 

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