Finance · 4 September 2017

Crime crackdown sees HSBC clash with small firms over account closures

HSBC claimed affected firms were given months notice to submit foreign supply chain records
HSBC claimed affected firms were given months notice to submit foreign supply chain records

Many small UK business owners have unexpectedly had their HSBC account frozen as a consequence of the bank’s crackdown on financial crime, it has been reported.

Having paid a £1.5bn settlement in the US after failing to prevent criminal cash laundering in 2012, Britain’s biggest bank has upped its scrutiny of business customers with foreign links.

However, owners of small firms have seen their own accounts frozen as a result of the bank’s efforts, and account closures have been criticised by affected entrepreneurs and small business organisations as heavy-handed, accusing HSBC of a slow response.

Speaking to the Daily Mail, Mike Cherry, national chairman of the Federation of Small Businesses (FSB), said HSBC’s “overbearing” clampdown on financial crime had led to the “debilitation of innocent firms”.

“They’re complying at every stage of HSBC’s investigations, supplying all the evidence requested, and then waking up to see their accounts frozen without warning,” he said.

Cherry added: “Of course the bank must take a zero-tolerance approach to illegal activity – but it must also be certain of suspicions before action is taken against the exporting strivers that drive our economy forward.”

Account closures appeared to particularly affect small business owners dealing with foreign exchange or paying people abroad, potentially disrupting payments to staff and suppliers.

While the bank has claimed customers were given months to respond to information requests, with several notice letters sent, many entrepreneurial customers took to social media to express outrage at HSBC’s slow response to account closures.

Detailing her experiences, Kelly Molson, director of design agency Rubber Cheese, tweeted in August that HSBC had failed to clarify the reason for account closures or offer a timeframe for lifting suspension.

As the bank seeks to cool tensions with the small business community, it released a statement confirming account closures were the result of its efforts to address financial crime, and it had requested business records and information from founders before closing the accounts.

“We apologise for the inconvenience this causes, but urge customers to respond to our requests as promptly and comprehensively as possible,” a spokesperson said.

“If we don’t receive all the information we need we may be forced to restrict services or, as a last resort, to close an account. We want to work with customers to ensure we don’t have to do this.”

Those with regular overseas transactions were asked for three-month supply chain records, instructing customers to seek advice in their local branch or via telephone.

In February 2017, HSBC’s latest swathe of branch closures left its 1m small business customers with 625 open branches across the whole country. The restructuring reflected a marked change in the way people interact with their bank, but many founders appeared to have struggled to access expert advice to solve recent account closures.

British bank spotlight: What to expect from HSBC business banking

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

Q&A

If you’ve found the article above useful, but have a more detailed and bespoke question, then please feel free to submit a query to our expert. We at Business Advice will get in contact with them on your behalf and arrange for a personalised response. These questions and answers will then be collated on the site for any other readers who have similar queries.

Ask a question

On the up