HSBC acquired M&S Retail Financial Services in 2004. 

The regulator found that, between June 2017 and October 2018, HSBC did not properly consider people’s circumstances when they missed payments. 

It said this meant the lender did not always do the correct affordability assessments when entering arrangements with people to reduce or clear their arrears. This related to customers with a loan, mortgage, credit card and unarranged overdraft.

The FCA said the lender sometimes took “disproportionate action” when people fell behind with payments, which risked them getting into further financial difficulty. 

The FCA found that these failings were the result of “deficiencies” in HSBC’s policies, procedures and training of staff at the time. It was also caused by “inadequate measures to identify and address instances of unfair customer treatment”. 

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Correcting the problem 

In 2018, HSBC identified problems with its handling of customers in financial difficulty and informed the FCA. The lender then invested £94m to correct these problems and issued more than £185m in redress payments to over one-and-a-half million customers.

A spokesperson from HSBC UK 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[al] issues with the regulator.” 

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “People must be able to trust their lenders to treat them fairly when in financial difficulty. By failing to do so, HSBC put one-and-a-half 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 considered HSBC’s remediation and redress when setting the fine. HSBC also agreed to settle the case, qualifying for a 30% discount on the fine, which was originally £8.9m. 

In 2021, the FCA fined HSBC nearly £64m for anti-money laundering (AML) failures, and again at the beginning of this year for failing to protect cash.