HSBC fined millions for poor treatment of customers in financial difficulty

The Financial Conduct Authority (FCA) has fined HSBC £6.2m for its poor treatment of struggling customers.

According to the watchdog, the lender – which also provides financial services for M&S Bank – didn’t take into account people’s circumstances when they missed a payment.

The failings, which took place between June 2017 and October 2018, included not carrying out affordability assessments for customers trying to catch up with missed payments and taking disproportionate action. This resulted in 1.5 people being put at risk of greater financial harm, the FCA found.

What caused the issues?

Problems with the bank’s policies, procedures, staff training and measures to identify and address unfair treatment were found to have caused the issues.

The steps taken by HSBC to put things right

HSBC has spent £94m identifying the issues and putting them right. The bank has also paid £185m in compensation to over 1.5 million affected customers.

As a result of taking this action, HSBC’s fine was reduced by 30% - it would have been more than £8m.

Trust is essential for customers

FCA spokesperson Therese Chambers said:

“People must be able to trust their lenders to treat them fairly when in financial difficulty.”

Lenders’ responsibilities to customers in financial difficulty

If you’re struggling to make repayments to your lender due to financial difficulties, your bank or building society has a duty to treat you sympathetically and positively.

There are official standards of lending practice that set out how lenders should deal with their customers.

If you’re in financial difficulty, these are the usual steps a lender will take:

Get in touch if they think you may be heading towards financial difficulty.

Talk to you about how they help people in financial difficulty.

Provide details of support organisations like ours that can offer free debt advice.

Gather information on your situation so they can suggest a suitable way forward.

Keep you informed on how much you owe.

Try to come up with an affordable plan to help you catch up with your payments.

Give you notice before taking action such as involving the courts - this should be a last resort.

So, if you're struggling to make repayments, get in touch with your lender to see what help is available.