HSBC is fined £6.2 million for mistreating customers in financial difficulty

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

The FCA highlighted that deficiencies in HSBC’s policies, procedures and staff training led to “disproportionate action” against those in arrears, exacerbating their financial problems.

Between June 2017 and October 2018, HSBC failed to sufficiently take into account customers’ individual circumstances, resulting in incorrect affordability assessments when negotiating payment arrangements. The FCA noted that HSBC did not have sufficient measures in place to identify and address cases of unfair treatment.

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

HSBC invested £94 million in fixing the problems and provided £185 million in reparations to more than 1.5 million affected customers. A spokesperson for HSBC UK said: “We are sorry that some customers who were in arrears between 2017 and 2018 did not receive the service they expected from us. We reported these issues to the FCA at the time and fully addressed affected 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, stressed the importance of treating customers in financial difficulty fairly: “People need to be able to trust that their lenders will treat them fairly when they are in financial difficulty. By failing to do so, HSBC has put 1.5 million people at risk of greater financial harm. It is to be commended for identifying the problem and rectifying it. However, the costs incurred by the company in doing so should serve as a warning to all lenders that they must understand their customers’ circumstances or make a bad situation worse.”

This fine underlines the critical need for banks to implement robust systems to support customers in financial difficulty and ensure such issues are addressed quickly and effectively.