British Central Bank Fines HSBC £57M Over Deposit Protection Failings

The Bank of England has fined HSBC £57.4mn for failing to protect billions of deposits for hundreds of customers in a "serious" compliance breach that lasted for seven years.

The BoE's Prudential Regulation Authority said on Tuesday that it had imposed the second-largest penalty in its history after HSBC failed to correctly identify customer deposits eligible for protection under the Financial Services Compensation Scheme between 2015 and 2022.

The regulator said the bank's mis-steps were "so significant" that it had "materially undermined the firm's readiness for resolution". HSBC had also "failed to be duly open and co-operative" with the watchdog in not alerting it for about 15 months about problems it had identified in the incorrect marking of accounts as "eligible" for FSCS protection.

Sam Woods, chief executive of the PRA, said: "The serious failings in this case go to the heart of the PRA's safety and soundness objective . . . [HSBC's subsidiary] fell far short of its obligations in this area, and failed to disclose its failings to us in a timely manner."

The fine is a blow for chief executive Noel Quinn, who has been rebuilding the bank's reputation and compliance procedures after a series of blows in the years after the financial crisis, in particular when it was fined $1.9bn for helping Mexican drug cartels launder money.

The PRA penalty follows another from the Financial Conduct Authority, which in December 2021 fined HSBC £64mn for "serious weaknesses" in its anti-money laundering controls.

(Source: Financial Times)