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HSBC to offer compensation after SME bank accounts frozen

By Dan Wilson September 10, 2017 - 1:35 pm

HSBC has been criticised for seriously inconveniencing a number of small business (perhaps numbering in the hundreds) after freezing their bank accounts as part of attempts to crack down on money laundering.

The case came to light on social media in particular with the story of Richard Davey, who wrote up his experiences on Medium in a piece called “HSBC is killing my business, piece by piece — How to plan for your bank screwing up.” Davey attempted to log in to make a payment and found himself unable to do anything with his frozen bank account.

He was the victim of a crackdown that’s billed as ‘safeguarding.’ It has come about after a $1.9bn fine in the US in 2012 due to suspicion that the bank wasn’t doing enough to tackle money-laundering. The process seems to involve interviews and questionnaires from HSBC as the try and understand the nature of your business and ascertain that you’re not a ne’erdowell. However, it seems that HSBC has been over-zealous and a Reuters investigation revealed that quite a number of UK SMEs have had their bank accounts erroneously frozen. It also revealed, as was Davey’s experience, that getting your bank account reinstated was no easy feat.

HSBC’s Amanda Murphy is the head of UK commercial banking. She has conformed that the bank has already offered payouts to affected small businesses or how much money has been offered. “If HSBC has disadvantaged a customer in any way, we’ll always seek to make it right,” she said.

She previously said: “Inhibiting an account is always a last resort, so to get to that stage we will have done everything we can to contact the customer and get the information we need.” (although that doesn’t seem to have been quite the case.)

Have you been affect by anything like this? Do let us know.

  • Paul
    2 months ago

    We’ve had an account with HSBC for 13 years, no o/d or loans.
    The closed our local branch 2 years ago, causing many locals problems with pay- ins & withdrawals.

    Had the letter requesting our information earlier this year for completion by August. I’d read about this and wasn’t looking forward to it, but the details required weren’t anything unreasonable and nothing personal. Having to get signed, validated copies of two proofs was a pain though.
    This HSBC form appeared as a screen hijack every time we logged into our company account and could not be missed. It was a real pain.

    Surprised to get a second letter on 22 Aug asking for further information. However, no request has since appeared at log in – and I’ve been checking everyday.
    Today, after reading this post, thought I’d check in again…to find a message saying that “as we haven’t provided the extra info, our account is to be closed”. They may allow us to keep it however, if we can provide it by mid December.
    (They haven’t yet specified what they required, as no further communications exist after the 22 Aug letter).

    Just spent an hour on the phone (inc 1 x unanswered wait of 20mins) to HSBC.
    Turns out they didn’t recognise our trading address of 13 years as they thought the business was being run from the correspondence address. They then re-entered this manually on their system and I have had to resubmit the same form I did a month ago.

    They could not answer why they are threating account closure on the basis that I hadn’t answered questions that they haven’t yet asked.

    HSBC are an uncaring, bullying, cack-handed shambles of an operation.

    Yes, I could move – but we all know the upheaval that will cause.
    One more of these though and I’ll be off. Don’t bank with them if you can help it.

    • Christopher Gardner
      2 months ago

      We have the same problem. We are a small luxury design firm. Currently we engaged I purchasing our trademarks and patents under a long negotiation that resulted in our purchase in September. As we are fully self funded, we went to pay our contractual amounts in line with our contract. We honestly thought our Pin Reader was not working. Then the fun began. We spent one day trying to reach a real person to define the HSBC new world vocabulary of ”Blackout” , Pre-mediation review board and we’ll call you ” there is no number for you to call”. After weeks, no messages in writing. Asking for the direct line to their Legal Department , I was told they dont have one. Since this started and I defaulted on my trademark purchase, the price has not risen with the seller reading the media on why we did not pay in time. Our extra cost as of today, is an addition $382,600 for not paying on time. If we loose our trademark – our small , hard working company is shut down. Others that have this problem should contact us for joining us in London’s Commerial Court for damages in a joint action.

  • Tony
    2 months ago

    We had the Same from Natwest last year.

    No Information requested & we couldn’t touch the account for 2 weeks.

    Natwest then told us to come in & collect the funds & take our business account elsewhere.
    No reason or any information was given, as they’d be breaking the law by revealing the reasons behind it.
    Since had a letter informing me, that we have to close & move all our personal accounts away from RBS, including the children’s savings accounts, although we did all this last year.

    • 2 months ago

      Had exactly the same thing with Natwest in 2009, including car insurance cancelled, had been banking with them for 12 years.

      Never got to the bottom of it.

  • 2 months ago

    We had same problems. We are a SME dedicated to sustainable plantations for biobased industries (sugarmills, pulp companies, etc.). Our business is directly related to climate change mitigation and renewable energy to replace fossil sources of energy and it includes bioenergy crops (we are http://www.bioenergycrops.com) and waste biomass. We have been involved in projects in Africa, Latin America and Asia since we open HSBC account and our startup in 2012. Never had any problem and we are 100% transparent with accountancy.. We are engaged with clients and investors to pay us for consultancy or small operations during project development in those countries. Now our suppliers cannot receive payments from us because of delays caused by HSBC safeguard team.

    Our currency account was frozen with no acknowledgement or communication with us. We can make international payments and this took already 30 days since we completed interviews and review. We provided a lot of details on our business, clients, payers, suppliers, countries we trade with, etc. We are losing money and we want to ask for compensations.

    We wrote harsh letter and we are planning legal actions if this is not resolved during this week.

    • 2 months ago

      Hi Emiliano,

      I’m sorry to hear about the difficulties that you’ve recently experienced with HSBC and can only try to imagine the frustration caused. I hope things have managed to get resolved for you.

      It appears this unforeseen freeze caught the business out and it seems only having one counterparty to work with left you with your hands tied. From the brief snippet of your situation I believe it may be worthwhile we schedule a quick call together.

      My name is Harrison Smith and I work on the new business desk at Western Union Business Solutions: the B2B subsidiary of Western Union. We help businesses with higher value international wire payments and currency conversions. We have the capability to send, receive and hold foreign currency for you, with particular strength in handling payments in exotic regions just like Asia, S.America and Africa.

      If you’re open to speaking then we would aim to improve your facilities for trading overseas above and beyond HSBC, at the very least it could help reduce your operational risk should this sort of thing arise again too.

      Kind Regards,
      Harrison

      02075396903
      harrison.smith@westernunion.com

  • Shut down HSBC
    2 months ago

    We have experienced the same issue. We have 12 employees working on Prototype designs in process now for 27 months. This week, no one will get paid. We have tapped all our resources for the past weeks. HSBC offers no communications since our ”interview” in June that was spot on and all ok. We run a simple business with many suppliers across the globe. We’ve secured our company without any debt. To stop our production of our first series will mean a re-start procedure of over 500,000 pounds. We also have trademark fees overdue in September as ALL fees usually are in this quarter. We solicit other companies effected to exchange basic contact information as we are engaging top international London solicitors to prepare action for damages against HSBC. As their practice is a mutual internal discision , a joint effort for recovery should be focused along with a public media forum that is clear, concise and factual. Any suggestion or links to such media should be shared, set up and compiled for the public to view. We have scheduled an interview next week with the London Times already.

    We received only a ONE line HSBC response to our weeks of communication:

    ”We have forwarded your letters to the complaint department” , signed my our ”safeguarding” manager.

    We honestly thought HSBC was safeguarding us from fraud and were quite happy in our early and complete compliance. The end of the letter reads in RED ”Talk to me about our current lending offers and our £2.1bn fund to support ambitious businesses in London”, your Relationship Manager | Business Banking West London | HSBC Bank Plc Ground Floor,
    So here we are. Each of those effected by HSBC’s in- house discisions to hamper our business while hiding behind the internet banking in a new world order in which anything goes and at any cost to trusted clients who made a fiduciary decision in selecting HSBC.

    The effect of this HSBC corrective maneuver is the highest level of risk to each of our employees and the entire investment in our company. Not accounting our 7/24 building for the past 3 years a business based on passion, timing and 40 years of experience in our industry.

    This is an outright terror attack on business that has immediate cost for HSBC’s malice. They should be held accountable with multiples of the damages they caused.

    • N. Shah
      2 months ago

      Exact same happened to us. Received a letter from HSBC dated 22nd March asking for us to contact the safeguard team to arrange a review interview. The interview took place 28th April and I was told that everything seems fine and nothing more to be done. However some time later we receive a second letter with exact same content and threatening to close our account if we do not contact HSBC. I called them again and was told that the letter was sent in error and everything is fine as we already had our interview and supplied all the information. Anyway thinking everything was in order we carried on with our business and suddenly early august when we are trying to login to online banking to pay salaries we notice we cannot login anymore. So I call HSBC and once being ping ponged around different teams am told that they have blocked the account. They are doing a review and will get back to us as soon as it has completed. They also told me that they had sent us letter notifying about this… We never received such letter or any other communication from HSBC about this review. I was also told that I haven’t provided the information and therefore I had to arrange for another interview…the second interview took place on the 11th August and to my big surprise the questions being asked were complete basic question such as residency, nationality and transactions. Usually this information apart from asking about transactions should already be known to the bank on opening the account and hopefully they should have a record of that. Anyway got this interview done and since then nothing and more than a month now without access to our funds. All direct debits were cancelled and we have been paying these through loans and some savings. We have also logged a formal complaint with HSBC and will take this a far as we possibly can as this is not an acceptable way of treating customers.

      Our company provides IT security consultancy to financial institutions and very familiar with the the compliance processes etc. and this is not standard process that has been followed here.

      You do not inhibit an account and then review it…you do the review in the background without causing suspicion to a potential criminal….causing this suspicion could lead to a criminal act by the bank to notify the criminal customer in advance. If among the several hundred businesses there were some who actually had done some criminal activity they would have already fled the country. Its just not they way review must be done.
      We would have no problem with HSBC performing what ever review they wanted as long as we carry on with our legitimate business but they treated us as criminals without anyone bringing about charges we have already been punished both mentally and financially.

    • I would be interested in joining your legal campaign. HSBC have frozen nearly a quater of a million eur in our accounts. No explanation of how long or why they are not letting us access our own money. So far this has taken 8 weeks. We have been running on reserves and now can not pay our staff salaries or suppliers this month. No help from HSBC or meaningful attempts at resolution.

  • Paul
    2 months ago

    …and so it goes on.
    After our story at the top of this thread, we received another HSBC letter today (sent to the office, not the different correspondence address that has always been used) asking for yet more details and threatening account closure. Same appears when we log in online. The problem is now that our correspondence address doesn’t match on their system.
    After a call, it appears the previous HSBC staffer didn’t check what she submitted at her end and started the whole process again by confusing the addresses.
    HSBC are worringly inefficient. The only comment they made in their defence was that all the other banks will have to do this soon and HSBC are just the first.
    Sorry seemed to be the hardest word.

  • Ben Bowerman
    2 months ago

    Complete nightmare. When I finally got to chat to someone who understood English she was rude and unhelpful. We have banked with HSBC for more years than I can remember. I have had to move the business account to Lloyds who tell me they have had loads of people move their accounts from HSBC. I had over £42k in the account and I at least expected to be treated with a little respect. It seems as if they want to get rid of small businesses.

  • Judge Jury
    2 months ago

    It’s heartbreaking, but we are in the New World. Nothing is safe. The banking crimes of the 2000’s still are in play with no punishment. HSBC behavior is predictable. Although as frustrating as it is, HSBC has the right to freeze any account and further not to tell you why. They can withhold information, evade your questions and even lie. It’s the right of any bank. If absolutely is nothing wrong with your accounts, they can still do this and further can restrict you from closing your account and transferring to another bank during their ”investigation”. If you can prove damages, you could have a claim, but you would have to prove that you had a loss and that they overstepped. A group action is predictable, but this is to early to start now. In the London Court, and in current phase of this act, you are unlikely to undo the process they have adopted. It is easy to be angry, but HSBC’s past dealing openly dealing with tainted funds for decades caught them with a big fine. Now, management have adopted an extreme procedure in understanding and getting to know their clients. I imagine most small businesses operate on far less that a couple of 100,000, so HSBC could care less on that SMBs. Advice would be to cooperate, be patient and ride the storm. Hiring a solicitor will be of little effect. Extreme situations usually unwind in time, much like an overwound clock.

  • Judge Jury
    2 months ago

    Just an update – This situation stems from upper managements discision to upright a series of safeguards that protect the Bank from a future fine now that they have been busted. The activities of HSBC’s pass in laundering money from Mexican Drug Cartels got them in this situation in the first place. You don’t receive a billion dollar fine if you are innocent. So, for now, not much is know on their true agenda. It could be part of their fine terms that they prove a new procedure of ”safeguarding” themselves. For now, it would be hard to make a claim against them. Once the dust settles, a class action could be a solution to damages but it will have to be known that they overstepped and cause money damages by freezing these accounts. I have no idea how many businesses are effected currently, but would imagine it’s hundreds not thousands. Those business likely have a set formula for a lockdown, ie: international transactions, currency accounts, many transactions and the like. It’s clear that HSBC has set up a new and inexperienced department to manage this malice. Time will tell as this unwinds and damages become clear. You will see major changes in all banking procedure, and an increase in risk dealing with ALL banks. Funds will never totally be safe again, and the legal cost of fighting ”through” a bank will exceed any money parked in any bank for normal business operations.

  • gay
    2 months ago

    Dear HSBC Board: way to shut the stable door after the horse has bolted.

    Dear HSBC customers: close accounts immediately. leave them with the clients they deserve – the mexican cartels they serve so well, while dumping on the little guys.

  • Judge Jury
    2 months ago

    Update. We’re overseeing this HSBC process, and slowly it’s unwinding on their own time table. For all those watching, it will be important in the future to have extensive documentation on any overseas transfers, names, offices, owners, etc, backed with contracts and receipts in advance. This could well happen with any other bank, busted or not. The internal process can be secretive , and no one says that any bank has to be friendly, accommodating , or even honest with the clients. What you see here in these actions are a clear bell ringing of the future of how banks will deal with their close relationship with fiscal authorities, inland revenue, and prosecutors. All small business will always be low hanging fruit. Throw in the ”Cyber” world of internet banking and I am sure the day will come when a hack wipes out hundred of clients without any liability to the guardians of the gate – The Banks. Lawyers and the governments have written the new rules, and the Banks will be the enforcers; judge and jury. We will all be at risk, ALL. THE .TIME.

  • El Woods
    2 months ago

    Another business victim of criminal HSBC behavior. They have frozen our foreign currency account that has over 500k in it. This is after about 50 phone calls with them, 10 of each are review calls where they harassed us to the point of asking what are my personal savings in another country. We do not borrow from HSBC. We self fund the business. HSBC deserves to be shut down. If there is a collective action against this bank, I want to join. The amount of hours I wasted dealing with these incompetent morons and the risk they put our business under and all the emotional distress they caused needs to be compensated. The only compensation acceptable to me is complete closure of HSBC. They are criminals.

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