Yahoo Finance HSBC breached banking rules over nine years, competition watchdog says
HSBC (HSBA.L) has been found breaching banking rules over a period of nine years after it told small firms it was a requirement to have a business current account to access loans.
The Competition and Markets Authority (CMA) said more than 200 of the bank’s customers that were small businesses had been misled.
The move, also known as “bundling”, affected a total of 204 firms relating to 210 loans worth more than £800,000 ($1.05m).
The lender reported the breaches to the competition watchdog itself and confirmed it ended them from September last year. They took place between 2002 and 2021.
HSBC wrote to affected customers to waive the non-compliance clauses from the relevant loan agreements, and has also offered refunds of all the current account fees and charges, it said.
The bank has also made clear that customers do not need to keep the accounts with HSBC to have a loan with them.
Read more: European markets mixed a Germany triggers emergency gas plans
The CMA has now imposed legally binding directions on HSBC ensuring it takes action to ensure the breaches do not happen again, including improved staff training.
Adam Land, senior director at the CMA, said: “The rules are clear – banks should not ask customers to open or retain business accounts in order to have a loan with them.
“It is right that HSBC have offered refunds and we will monitor compliance with our directions closely to ensure this doesn’t happen again.”
A HSBC UK spokesman said: “We are sorry that an error in our legal documentation for 200 predominantly Scotland-based customers, resulted in us potentially hindering them from switching banks.
“We have apologised to the customers concerned and have proactively refunded all fees and charges that they incurred during the period that those terms and conditions were applicable.”
The news comes after similar breaches by Danske Bank (DANKSE.CO) in relation to bounceback loans. The CMA was forced to write to the Danish lender over bundling practices being used in its lending under the COVID support scheme.
This affected more than 300 of its small business customers.
Watch: HSBC doubles annual profits but eyes China woes on several fronts
