The Financial Conduct Authority (FCA) has fined HSBC £6.2 million for failures in its treatment of customers in arrears or experiencing financial difficulty.

According to the regulator, between June 2017 and October 2018, HSBC failed to properly consider people’s circumstances when they had missed payments.

It said that HSBC did not always do the right affordability assessments when entering arrangements with people to reduce or clear their arrears. The bank also took "disproportionate" action when people fell behind with payments, which risked people getting into greater financial difficulty.

The financial watchdog says that the failings were down to 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.

In 2018, HSBC identified that there were issues with their handling of customers in financial difficulty and notified the FCA.

HSBC invested £94 million in identifying the issues and putting them right. HSBC also issued redress payments totalling £185 million to over 1.5 million customers. 

Therese Chambers, Joint Executive Director of Enforcement and Market Oversight said:

"People must be able to trust their lenders to treat them fairly when in financial difficulty," said Therese Chambers, joint executive director of enforcement and market oversight. "By failing to do so, HSBC put 1.5 million people at risk of greater financial harm.

“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.”

The FCA has taken HSBC’s remediation and redress programme into account when setting its fine.

HSBC also agreed to settle the case and qualified for a 30 per cent discount to the financial penalty imposed, which would otherwise have been £8,971,600. 

US banking giant Citigroup was earlier this week hit with one of the largest fines for control breaches in the UK since the 2008 financial crisis, totalling £61.6 million.

The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) imposed the hefty penalties after identifying persistent failures in Citi’s trading systems and controls over a four-year period.

The PRA fined Citigroup's UK division, Citigroup Global Markets Limited (CGML), £33.88 million for weaknesses between April 2018 and May 2022 that "crystallised into trading incidents". This included a major error in May 2022 when an experienced trader incorrectly inputted an order, inadvertently executing $1.4 billion worth of trades on European exchanges.

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