By Lucy Adautin
HSBC has been fined £57.4m by the Bank of England (BoE) for “serious failings” over its requirements to protect customer deposits.
The bank failed to accurately identify deposits eligible for Britain’s Financial Services Compensation Scheme, the Bank’s Prudential Regulation Authority (PRA) said.
Under the scheme, customer deposits are protected up to the value of £85,000.
The Bank said the failings occurred between 2015 and 2022.
The fine is the second highest ever applied by the regulator, reflecting the seriousness of the failings, the PRA said.
Under depositor protection rules, banks must have systems and controls in place to make sure that financial information is logged correctly. This information is needed if the FSCS has to make payments to customers if a bank collapses.
The PRA said HSBC Bank incorrectly marked 99% of its eligible beneficiary deposits as “ineligible” for FSCS protection.
HSBC Bank in addition provided incorrect evidence that its systems satisfied certain requirements of the deposit protection rules, the PRA said.
PRA chief executive Sam Woods said: “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,” he said, adding the lender had fallen “far short of its obligations in this area, and failed to disclose its failings to us in a timely manner”.
The bank’s cooperation throughout the investigation, including admitting early on that it had broken rules, resulted in a 15% reduction to the penalty, the regulator said.
HSBC said it was pleased to have resolved the “historic matter”.
“The PRA’s final notice recognises the Bank’s co-operation with the investigation, as well as our efforts to fully resolve these issues,” the bank added.
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