Watchdog Says HSBC broke small Business Banking Rules
October 22, 2014 10:43 am
UK Bank HSBC (HSBA.L) along with Irish First Trust Bank have both been found to have broken small business banking rules by forcing businesses that take out a loan with them to also open a business current account with the bank as a condition of the loan, this is a practice known as ‘bundling’. The practice was outlawed in 2002 and eight UK banks entered into a legally binding agreement following a competition commission investigation.
CMA (The competitions & marketing Authority) became aware of possible breaches of the rules and ordered an audit of regulation adherence at the eight banks. It was found as a result of this audit that two banks HSBC and First Trust had indicated to some small businesses that a current account was a condition of loan.
The CMA also stated that it had found evidence at two other banks of low awareness amongst staff of the rules to follow and has requested another audit at all eight banks which will report next year,
CMA chief executive Alex Chisholm stated, “Breaches of these undertakings is a serious matter and we have directed FTB and HSBC on the actions they must take to immediately correct the situation.”
HSBC (HSBA.L) in a statement said: “HSBC takes its responsibility to UK business seriously and we regret that the bank has not been fully compliant with ‘bundling’ undertakings. Since the issue was discovered, we have been working with the CMA to implement a plan ensuring full compliance with the requirements, and will be regularly reporting back to the CMA. As part of our audit review, where we find a customer has received the wrong information, we will take action to ensure they have the right information going forward.”
Shares in HSBC are up 6p in trading this morning at 632.4p
UK Bank HSBC (HSBA.L) along with Irish First Trust Bank have both been found to have broken small business banking rules by forcing businesses that take out a loan with them to also open a business current account with the bank as a condition of the loan, this is a practice known as ‘bundling’. The practice was outlawed in 2002 and eight UK banks entered into a legally binding agreement following a competition commission investigation.
CMA (The competitions & marketing Authority) became aware of possible breaches of the rules and ordered an audit of regulation adherence at the eight banks. It was found as a result of this audit that two banks HSBC and First Trust had indicated to some small businesses that a current account was a condition of loan.
The CMA also stated that it had found evidence at two other banks of low awareness amongst staff of the rules to follow and has requested another audit at all eight banks which will report next year,
CMA chief executive Alex Chisholm stated, “Breaches of these undertakings is a serious matter and we have directed FTB and HSBC on the actions they must take to immediately correct the situation.”
HSBC (HSBA.L) in a statement said: “HSBC takes its responsibility to UK business seriously and we regret that the bank has not been fully compliant with ‘bundling’ undertakings. Since the issue was discovered, we have been working with the CMA to implement a plan ensuring full compliance with the requirements, and will be regularly reporting back to the CMA. As part of our audit review, where we find a customer has received the wrong information, we will take action to ensure they have the right information going forward.”
Shares in HSBC are up 6p in trading this morning at 632.4p
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