ASIC concludes HSBC’s enforceable undertaking

ASIC has finalised its monitoring of HSBC Bank Australia Limited’s (HSBC) compliance with the court enforceable undertaking (EU) entered into by HSBC on 13 May 2016 (refer 16-145MR).

The EU followed a proactive ASIC surveillance of HSBC’s advice on retail structured products.

ASIC’s surveillance found instances between January 2009 and March 2013, where the scope of advice was restricted to a single HSBC structured product and advisers had obtained little or no information about their clients’ relevant personal circumstances such as their assets, liabilities, income or debts before providing advice. ASIC was also concerned that in some cases there was insufficient evidence that the advice was appropriate for the clients’ circumstances or needs (refer 15-036MR).

As a result of the surveillance, HSBC ceased offering structured products to retail clients in March 2013.

The EU required HSBC to develop and implement a review and remediation program to compensate customers who lost money because of inappropriate advice.

As part of the remediation program, HSBC reviewed 510 structured product advice files and determined that 82 files (16%) contained inappropriate advice. HSBC also tested and reviewed advice provided on other product types such as superannuation, insurance, annuities and other investments, and identified much lower instances of inappropriate advice having been provided in those areas. HSBC has offered affected clients approximately $690,000 in compensation across all product types.

HSBC’s work under the EU was assessed by Ernst & Young, who performed the role of the Independent Expert under the EU. Ernst & Young determined that HSBC has materially delivered on its requirements in the EU and made no further recommendations.

Ernst & Young’s final report summary is available here.

HSBC ceased providing all personal financial advice to customers on 2 March 2018.

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