HSBC is grappling with a £57.4 million fine imposed by the Prudential Regulatory Authority (PRA) over a span of seven years, from 2015 to 2022, for inadequacies in accurately recording accounts eligible for compensation under the Financial Services Compensation Scheme (FSCS).
During this period, a significant oversight led to the misclassification of up to 99% of accounts that were entitled to receive up to £85,000 in compensation in the event of a bank failure. These accounts were erroneously marked as ineligible for FSCS protection.
According to the PRA, HSBC provided misleading evidence that its systems met specific requirements of the deposit protection rules. The depositor protection lapses were deemed so severe that the PRA asserted they had “materially undermined” HSBC’s preparedness for a restructuring.
This fine ranks as the second-highest ever imposed by the regulatory body. HSBC’s cooperation with the investigation and acknowledgment of rule violations granted the bank a 15% reduction in the penalty. Additionally, an agreement to address the issue led to an extra 30% reduction.
Sam Woods, Chief Executive of the PRA, emphasized the gravity of the situation, stating, “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.” Woods expressed disappointment, noting that HSBC had “fallen far short of its obligations in this area and failed to disclose its failings to us in a timely manner.”
Comments