The Bank of England’s financial services watchdog has imposed a £57.4m fine on HSBC for past shortcomings in depositor protection, tracing back to 2015.
The Prudential Regulation Authority noted that the bank did not properly recognize deposits qualifying for the Financial Services Compensation Scheme (FSCS) coverage. The authority highlighted that HSBC failed to supply essential details necessary for the swift reimbursement of depositors in case of a bank collapse.
HSBC severely lacked in meeting depositor protection duties, according to the regulator. Issuing its second-largest fine to date, following an £87m penalty imposed on Credit Suisse last year, the PRA highlighted that HSBC’s shortcomings in depositor protection were so critical that they substantially compromised the bank’s preparedness for a potential collapse.
The regulator pointed out that the bank did not promptly report issues identified over a 15-month span regarding the incorrect classification of accounts as “eligible” for FSCS coverage. The FSCS serves as the UK’s official compensation scheme, safeguarding depositors by reimbursing up to £85,000 of their savings if their bank fails.
Sam Woods, the deputy governor for Prudential Regulation and CEO of the PRA, stated:
“These grave lapses directly impact the PRA’s core objective of ensuring safety and soundness. Full compliance with our resolution preparedness requirements is crucial for all banks. HBEU significantly failed in fulfilling these responsibilities and did not report these shortcomings in a timely fashion. These oversights have led to the current enforcement, including the substantial fine.”
