HSBC fined £57.4m for deposit protection failings

HSBC has been fined £57.4m by the Bank of England’s Prudential Regulation Authority (PRA) for failings around protecting customer deposits.

These included the failure to accurately identify deposits that were eligible for protection through the Financial Services Compensation Scheme (FSCS).

Both HSBC Bank, where the failings occurred between 2015 and 2022, and HSBC UK Bank, where the failings were between 2018 and 2021, have been hit by the financial penalty.

The fine is the second highest ever imposed by the PRA, which the regulator said reflects the “seriousness” of the failings.

Depositor protection rules require firms to put in place adequate systems and controls, and governance, to ensure the integrity of critical information relied on by the FSCS to make prompt payments to depositors in the event of a firm’s failure.

HSBC’s depositor protection failings were so significant that the PRA determined it had “materially undermined” the firm’s readiness for resolution.

The bank also failed to be co-operative with the PRA in not alerting the regulator over an approximate 15-month period about problems identified in the incorrect marking of accounts as “eligible” for FSCS protection. This was information which the regulator would expect firms to share fully and in a timely way, the PRA said.

Deputy governor for prudential regulation and CEO of the PRA, Sam Woods, commented: “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.

“HSBC 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.”

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