HSBC Fined £6.2 Million for Mishandling Customers in Financial Difficulty

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HSBC has been fined £6.2 million by the UK’s Financial Conduct Authority (FCA) for failing to properly support customers in arrears or experiencing financial difficulty.

The FCA highlighted that shortcomings in HSBC’s policies, procedures, and staff training led to “disproportionate action” against those behind on payments, exacerbating their financial troubles.

Between June 2017 and October 2018, HSBC did not adequately consider customers’ individual circumstances, resulting in improper affordability assessments when negotiating payment arrangements. The FCA noted that HSBC lacked sufficient measures to identify and address cases of unfair treatment.

Initially set at £8.97 million, the fine was reduced by 30% as HSBC agreed to settle and took corrective actions. The issues came to light in 2018 when HSBC itself identified the problems and reported them to the FCA.

HSBC invested £94 million in rectifying the issues and provided £185 million in redress payments to over 1.5 million affected customers. An HSBC UK spokesperson stated: “We’re sorry that between 2017 and 2018 some customers who fell into arrears did not receive the service they expected from us. We reported these issues to the FCA at the time and have fully remediated impacted customers. We have invested in our processes since these matters came to light and are pleased to have resolved these historic issues with the regulator.”

Therese Chambers, co-head of enforcement at the FCA, emphasized the importance of fair treatment for customers in financial difficulty: “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.”

This penalty underscores the critical need for banks to implement robust systems to support customers facing financial hardships and to ensure that such issues are promptly and effectively addressed.