ASIC has finalised its monitoring of HSBC's Australia unit for compliance with an enforceable undertaking that began almost three years ago after the regulator found that HSBC advisers had advised clients on a structured product with little or no information about their personal circumstances and the appropriateness of the product to certain clients' needs.
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. At the time, 464 clients were under review.
As a result of the surveillance, HSBC ceased offering structured products to retail clients in March 2013.
The enforceable undertaking required HSBC to develop and implement a review and remediation program to compensate customers who lost money because of inappropriate advice.
Part of the remediation program involved HSBC reviewing 510 structured product advice files. It determined 82 files (16%) contained inappropriate advice.
In May 2018, HSBC reported an additional 220 cases had process issues. Overall, HSBC offered affected clients about $690,000 in compensation across all product types.
The bank also offered compensation to clients where there was insufficient information in the client's file to conclude the assessment of advice provided.
HSBC's work was independently assessed by EY, which determined that the bank has materially delivered on its requirements under the enforcement undertaking. In its final report summary, EY noted that HSBC has ceased providing personal financial advice to retail customers and as such no longer presents any ongoing financial advice risks.
HSBC ceased providing all personal financial advice to customers on 2 March 2018.