HSBC Fined By U.K. Regulator Over Failures in Customer Treatment

By Elena Vardon

HSBC has been fined 6.3 million pounds ($8.0 million) by the U.K. watchdog for failures in its treatment of at least 1.5 million customers in financial difficulty.

The Financial Conduct Authority said Thursday that it fined HSBC UK Bank, HSBC Bank and Marks and Spencer Financial Services for failing to "properly consider" the circumstances of its clients when they missed payments or fell into arrears over the June 2017 to Oct. 2018 period, as well as its failure to apply forbearance to support them and for undertaking disproportionate action.

The lender offered secured retail mortgages, unsecured loans, credit cards, and overdrafts to customers under the First Direct, Marks and Spencer Bank and John Lewis Financial Services brands.

HSBC identified the issues and flagged them to the regulator in 2018. It invested GBP94 million and issued GBP185 million in redress payments to over 1.5 million customers, the FCA said. This was taken into account when setting the fine which was reduced by 30% from the original GBP9.0 million penalty, it added.

The costs HSBC incurred in fixing the issues "should be a warning to all lenders that they need to understand their customers' circumstances so as not to make a bad situation worse," the FCA's Joint Executive Director of Enforcement and Market Oversight, Therese Chambers, said.

"We're sorry that between 2017 and 2018 some customers who fell into arrears did not receive the service they expected from us," a spokesperson for HSBC UK said. The lender is pleased to have resolved the problem, the person added.

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

May 23, 2024 07:25 ET (11:25 GMT)

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