Regulator says bank failed to perform appropriate affordability assessments for customers in financial difficulty
The Financial Conduct Authority (FCA) has fined HSBC UK Bank plc, HSBC Bank plc, and Marks and Spencer Financial Services plc (HSBC) £6.28 million for failures in treating customers in arrears or experiencing financial difficulty.
According to the regulator, between June 2017 and October 2018, HSBC did not properly consider customers’ circumstances when they missed payments and often failed to perform appropriate affordability assessments when making arrangements to reduce or clear arrears.
The FCA said HSBC even took disproportionate action against some customers who fell behind on payments, increasing their financial difficulties.
It added that HSBC’s failings were due to deficiencies in the bank’s policies, procedures, and staff training, as well as inadequate measures to identify and address unfair customer treatment.
In 2018, HSBC recognised the issues with its handling of customers in financial difficulty and notified the FCA. The bank subsequently invested £94 million in identifying and rectifying these issues. HSBC also issued redress payments totalling £185 million to over 1.5 million customers.
The regulator has taken HSBC’s remediation and redress program into account when setting its fine, and the bank also agreed to settle the case and qualified for a 30% discount to the financial penalty imposed, which would otherwise have been £8.97 million.
“People must be able to trust their lenders to treat them fairly when in financial difficulty,” said Therese Chambers, FCA’s joint executive director of enforcement and market oversight. “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.”
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