The Financial Conduct Authority has imposed a combined penalty of £6,280,100 on HSBC UK Bank plc, HSBC Bank plc, and Marks and Spencer Financial Services plc for breaching its rules on the fair treatment of customers experiencing financial difficulty, the regulator announced on 23 May 2024. The enforcement action covered retail banking, consumer credit, and mortgage products, and related to failings between 1 June 2017 and 31 October 2018. HSBC agreed to settle and qualified for a 30% discount on a penalty that would otherwise have been £8,971,600.
Marks and Spencer Financial Services plc is part of the HSBC Group, and the firms were found to have breached FCA Principles 3 and 6 — which relate to the management and control of a regulated business and to the fair treatment of customers respectively — as well as specific rules in the Consumer Credit sourcebook and the Mortgages and Home Finance sourcebook.
FCA FINDINGS
At the core of the FCA's findings was the determination that HSBC and M&S Financial Services had inadequate systems for identifying customers displaying signs of financial vulnerability and for ensuring those customers received appropriate forbearance when they sought assistance. The FCA found that the firms' processes did not consistently deliver the level of support required under its rules.
The failures were identified across the full range of products covered by the enforcement action. In retail banking, consumer credit, and mortgage lending, the FCA found that the systems, processes, and staff capabilities in place were not adequate to ensure consistent and fair outcomes for customers who raised concerns about their ability to meet financial obligations. Whether in the quality of conversations between staff and distressed customers, the range of forbearance options made available, or the monitoring of outcomes for those who had been placed on support arrangements, the regulator concluded that the standard of care fell short.
REMEDIATION AND REDRESS
HSBC identified the problems in 2018 and notified the FCA. It invested £94 million in identifying and fixing the issues and paid redress totalling £185 million to more than 1.5 million customers, which the FCA took into account when setting the fine.