The FCA has fined HSBC UK Bank plc, HSBC Bank plc and Marks and Spencer Financial Services plc (HSBC) almost £6.3m, which would have been almost £9m but for HSBC’s agreement to resolve the matter, for failures in its treatment of customers who were in arrears or experiencing financial difficulty.
Between 1st June 2017 and 31st October 2018, HSBC UK breached Principles 3 and 6 by failing to show forbearance and due consideration to customers when they fell into arrears or experienced financial difficulties. As a result of these failings, at least 1.5 million customers were identified who suffered, or were at risk of suffering detriment. To date, HSBC UK has paid £185,000,000 in redress to these customers. The failings were caused by deficiencies in HSBC’s policies and procedures and the training of their staff, as well as inadequate measures to identify and address instances of unfair customer treatment.
The main issues highlighted involved customer circumstances, forbearance and disproportionate action.
The main issues highlighted involved customer circumstances, forbearance and disproportionate action. Understandably, given the nature of the findings, these issues significantly involved vulnerable customers. Although in a different sector, there is a good deal of commentary in relation to systems and controls in relation to vulnerability which could be applied to financial services generally:
- Gaps and weaknesses in training of front-line agents / staff some of whom, as a result, failed to pick up on cues, wording or behaviours that indicated potential financial difficulty or more complex circumstances.
- Gaps and weaknesses in policies and procedures, and in some cases inconsistent application of these policies and procedures.
- Inadequate discussion of Management Information relating to customer outcomes across a range of core governance committees which had responsibility for customer outcomes.
- Inadequate quality assurance frameworks for monitoring customer calls, which limited the ability to identify issues with the overall treatment of customers during the collections process.