HSBC: could it be the next group to redomicile out of the UK?

HSBC, the UK bank, has agreed to pay $470m to settle allegations that it engaged in “abusive” practices before seizing the homes of Americans who defaulted in the wake of the financial crisis.

The deal resolves claims that the lender breached rules during the housing market downturn, which may have deprived homeowners who were struggling with mortgage payments of chances to keep their properties.

The agreement mirrors a $25bn settlement in 2012 that officials reached with five of the largest US banks, including Bank of America and JPMorgan Chase.

It adds to the string of fines and settlements HSBC has run up in recent years, including a $1.9bn penalty in 2012 for laundering drug money and facilitating terrorist financing.

US authorities contended that HSBC failed to accurately keep track of payments made by borrowers, charged unauthorised fees, and provided “false or misleading information” in response to complaints from customers.

Among other allegations, they also complained that HSBC inadequately trained its staff, failed to respond to inquiries from borrowers, and turned down requests for loan modifications to consumers who were in fact eligible.

Under the accord unveiled on Friday, the UK-based lender will provide $370m worth of relief to borrowers and homeowners, including lower interest rates and reduced principal for borrowers at risk of default. The bank will also pay $100m to the authorities.


Penalty imposed on HSBC in 2012 for laundering drug money and facilitating terrorist financing

As part of the deal HSBC committed to make big changes to how it deals with foreclosures and to compensate some borrowers who lost their homes.

Eric Schneiderman, New York attorney-general, said: “There has to be one set of rules for everyone, no matter how rich or how powerful, and that includes lenders who engage in abusive business practices.”

Kathy Madison, head of HSBC’s US consumer finance arm, said: “We are pleased to have reached this settlement and believe it is a positive result that benefits American homeowners and the US housing industry.”

She added that during the housing market downturn HSBC “approached foreclosure as a last-resort option”.

The bank reached the civil settlement with a series of bodies, including the Department of Justice, Consumer Financial Protection Bureau and 49 state attorneys-general.

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