$73 million fine to HSBC Bank due to “serious shortcomings” in protecting deposits

HSBC Bank has been slapped with a substantial fine of £57.4 million ($73 million) for what the Bank of England’s Prudential Regulation Authority deems as “serious failures” in safeguarding certain depositors over an extended period. This penalty marks the first of its kind under British laws designed to protect customers in the event of bank defaults.

The Prudential Regulation Authority outlined that HSBC fell short in accurately identifying deposits eligible for the UK’s Financial Services Compensation Scheme. This scheme safeguards customers’ cash up to £85,000. The authority specifically pointed to deficiencies within an HSBC unit, which, shockingly, misidentified 99% of eligible deposits as ineligible.

The severity of these failures led the Bank of England to conclude that they would have “materially undermined” any regulatory attempts to address them effectively. In response, the Prudential Regulation Authority imposed a fine of £57 million on HSBC, a reduction from the initially contemplated £96.5 million, acknowledging the bank’s cooperation during the investigations. This significant penalty underscores the importance of adherence to customer protection regulations within the banking sector.