HSBC customers paid £185million in compensation after being treated 'unfairly'

23 May 2024 , 10:48

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HSBC was fined £6.2million by the FCA (Image: Alberto Pezzali/AP/REX/Shutterstock)

HSBC has compensated millions of customers after it was found to have treated those in financial difficulty "unfairly"

The Financial Conduct Authority (FCA) slapped a £6.2million fine on the high street banking giant after an investigation into the company found that its policies, procedures and staff training meant it sometimes took “disproportionate action” when people fell behind on payments. The FCA said this risked them entering greater financial difficulty.

The financial regulator ruled HSBC had failed to properly consider people’s circumstances when they had missed payments between June 2017 and October 2018. This included not always doing the right affordability assessments when entering arrangements with customers to reduce or clear their arrears. It added that HSBC had “inadequate measures” to identify and deal with cases of unfair customer treatment.

In 2018, HSBC identified issues with their handling of customers in financial difficulty and notified the FCA. The fine, originally priced at £8.97million, was reduced by 30% as HSBC agreed to settle the case and took action to resolve the issue. The high street bank invested £94million in identifying the issues and "putting them right" and has paid £185million in compensation payments to those who were affected, overall offering £233million in redress. This works out around £123 per person, on average.

An HSBC UK spokesperson said: “We’re sorry that between 2017 and 2018 some customers who fell into arrears did not receive the service they expected from us. We reported these issues to the FCA at the time and have fully remediated impacted customers. We have invested in our processes since these matters came to light and are pleased to have resolved these historic issues with the regulator.”

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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. By failing to do so, HSBC put 1.5million 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.'

Ruby Flanagan