The Financial Conduct Authority (FCA) has imposed a fine of £6,280,100 on HSBC UK Bank plc, HSBC Bank plc, and Marks and Spencer Financial Services plc (HSBC) for significant failures in their treatment of customers who were experiencing financial difficulties. 

According to the FCA, between June 2017 and October 2018, HSBC did not properly consider individual customer circumstances when payments were missed. This led to inadequate affordability assessments, where in some cases, the bank took disproportionate actions against customers who fell behind on payments, potentially worsening their financial situations.

The FCA identified that these failings stemmed from deficiencies in HSBC’s policies and procedures, inadequate staff training, and insufficient measures to identify and rectify unfair treatment of customers.

In 2018, HSBC recognised the issues in their handling of financially distressed customers and reported them to the FCA. The bank subsequently invested £94 million in addressing these issues and implementing corrective measures. Additionally, HSBC issued redress payments totaling £185 million to over 1.5 million customers.

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The FCA took HSBC’s remediation efforts and the redress programme into account when determining the fine. HSBC’s agreement to settle the case qualified it for a 30% discount on the financial penalty, which would have otherwise been £8,971,600.

“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 at the FCA.

“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.”