The Prudential Regulation Authority (PRA) said HSBC failed “over many years” to properly put in place the requirements to protect saver deposits dating back to 2015
HSBC has been slapped with a hefty £57.4 million fine by the Bank of England’s Prudential Regulation Authority (PRA) for “serious failings” in protecting customer deposits.
This is the second largest penalty ever given out by the financial watchdog. The PRA revealed that HSBC had failed to properly implement requirements to protect saver deposits for many years, dating back to 2015.
The bank had incorrectly marked 99% of eligible beneficiary deposits as “ineligible” for protection under the Financial Services Compensation Scheme (FSCS). HSBC’s fine was initially set at £96.5 million but was reduced due to the bank’s cooperation with the investigation, early admission of rule breaches and agreement to resolve the matter.
Sam Woods, the Bank’s deputy governor for prudential regulation and chief executive of the PRA, said: “The serious failings in this case go to the heart of the PRA’s safety and soundness objective.” He added that it’s crucial all banks fully comply with their requirements around preparedness for resolution, and that HSBC “fell far short of its obligations in this area, and failed to disclose its failings to us in a timely manner”.
The PRA has stated that HSBC Bank’s failures in depositor protection were “so significant, the PRA determined that it had materially undermined the firm’s readiness for resolution”. The bank also failed to be “duly open and cooperative” by not alerting the watchdog about problems with incorrectly marking accounts as eligible for FSCS protection for around 15 months.
HSBC Bank’s failures date back to between 2015 and 2022 and for HSBC UK Bank to between 2018 and 2021. The lender did not assign clear ownership or ensure a senior manager was responsible for the processes required under the deposit protection rules, according to the PRA.
The PRA added that HSBC incorrectly claimed its systems met several requirements under the deposit protection rules. The bank also failed to provide final annual accounts signed off by directors confirming compliance over “multiple years”. However, the PRA said it did not believe that HSBC’s breaches were “deliberate or reckless”.
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