The fine is the second highest ever levied by the Bank of England’s financial stability arm. The highest fine was £87m, imposed on Credit Suisse last July.
HSBC was fined due to “historic depositor protection failings arising from the firms’ failures over many years to properly implement the requirements set out in the Depositor Protection Rules.”
These included the failure to accurately identify deposits that were eligible for Financial Services Compensation Scheme (FSCS) protection.
The failings occurred for HBEU between 2015 and 2022, and for HBUK between 2018 and 2021.
What are the Depositor Protection Rules?
The Depositor Protection Rules require financial firms to put in place “adequate systems and controls, and governance, to ensure the integrity of critical information which the FSCS relies upon to make prompt payments to depositors in the event of a firm failure”
HBEU’s depositor protection failings were so significant the PRA determined that it had “materially undermined the firm’s readiness for resolution”.
HBEU also failed to be “duly open and cooperative” with the PRA about problems identified in the incorrect marking of accounts as “eligible” for FSCS protection.
Sam Woods, chief executive officer of the PRA, said: “The serious failings in this case go to the heart of the PRA’s safety and soundness objective. It is vital that all banks comply fully with our requirements around preparedness for resolution. HBEU fell far short of its obligations in this area, and failed to disclose its failings to us in a timely manner. These failures led to today’s action, including the significant fine.”
In a statement, HSBC said: “[We are] pleased to have resolved this historic matter, which relates to the bank’s compliance with certain parts of the PRA’s depositor protection rules.
“The PRA’s final notice recognises the bank’s cooperation with the investigation, as well as our efforts to fully resolve these issues.”