Compliance expert states HSBC’s ‘reckless approach’ may have led to £57m fine

by | Feb 12, 2024

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HSBC has been fined more than £57m by the Bank of England’s Prudential Regulation Authority (PRA) for failing to protect consumer deposits adequately.

The fine, totalling £57,417,500, is the second highest ever applied by the regulator due to HSBC’s failure to mark 99% of eligible deposits as “ineligible” for Financial Services Compensation Scheme (FSCS) protection between 2015 and 2022. 

The PRA deemed the breach of deposit protection rules significant, posing a challenge to HSBC’s restructuring readiness, possibly worsened by the bank providing inaccurate evidence regarding its compliance.


Vivek Dodd, CEO of Skillcast, a compliance e-learning service, shares his opinion on the matter, commenting: 

“HSBC’s recent breach by the PRA, while potentially unintended, highlights the crucial reality of meeting compliance standards and emphasises that ignorance or inadequate training cannot justify regulatory breaches.” 

He adds, “This reckless approach from HSBC is a reminder of the severity of consequences that can arise from negligence towards meeting regulations, showing the importance of integrity and the necessity for all businesses to be held accountable to equal standards.”


In light of recent events, Skillcast has outlined potential factors that may have led to HSBC’s fine and provided recommendations for businesses to prevent unintentional breaches:

Identifying Potential Gaps

One of the key lessons from HSBC’s case is the significance of identifying and proactively addressing potential regulatory gaps. Businesses must conduct regular audits and assessments of their systems and processes to ensure compliance with relevant regulations. 


This includes appointing designated senior managers responsible for overseeing regulatory requirements and ensuring adequate controls are in place to mitigate risks effectively.

Enhancing Transparency and Communication

Transparency and communication are essential in maintaining regulatory compliance. HSBC’s failure to promptly disclose issues related to deposit protection highlighted a critical lapse in communication with regulatory authorities. 


Businesses should prioritise open and timely communication with regulators, promptly reporting any identified issues or breaches. Establishing clear channels of communication and fostering a culture of transparency within the organisation can help prevent regulatory oversights and demonstrate a commitment to compliance.

Investing in Training and Education

Ensuring that employees are adequately trained and informed about regulatory requirements is vital for compliance. HSBC’s case underscores the importance of ongoing training programmes to educate staff about their responsibilities and the implications of non-compliance. 


By investing in training and education initiatives, businesses can empower employees to identify and proactively address potential compliance issues, reducing the risk of regulatory breaches.

Implementing Robust Compliance Frameworks

Building robust compliance frameworks is crucial for mitigating regulatory risks. Businesses should establish comprehensive policies, procedures, and controls to ensure adherence to regulatory requirements across all areas of operation. 


This includes regularly reviewing and updating compliance frameworks to reflect changes in regulations and industry best practices. By implementing robust compliance frameworks, organisations can proactively identify and address potential vulnerabilities, reducing the likelihood of regulatory breaches.

Collaborating with Regulatory Authorities

Collaboration with regulatory authorities is essential for maintaining compliance and building trust within the industry. HSBC’s cooperation with the PRA throughout the investigation and admission of breaches played a significant role in reducing the fine imposed.

Businesses should prioritise building constructive relationships with regulatory authorities, engaging in proactive dialogue, and demonstrating a willingness to address compliance issues cooperatively. By collaborating with regulatory authorities, organisations can effectively navigate regulatory challenges and mitigate potential penalties.

If you are concerned about compliance gaps within your own business, visit the Skillcast site for further information on compliance audits and training.

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