Anyone surprised HSBC got fined?

Do note that HSBC didn\’t get fined for handling drug money. It got fined because its paperwork processes for identifying whether it was handling drug money were deemed inadequate.

This is, I think, an important point. And to see the full glory of bank paperwork, how about this from Northern Rock:

More than 150,000 customers at the state-owned Northern Rock will have their interest payments on loans handed back to them due to paperwork errors, the Treasury has admitted,

So what happened?

George Osborne, the Chancellor, told MPs that due to administrative errors made in 2008, loan agreements for around 152,000 Northern Rock borrowers were invalid. “As a result, interest payments on these loans are not legally enforceable,” he said.

Got to be a terrible error, eh?

Under the terms of the Consumer Credit Act, lenders have to print on all statements made to customer the size of the loan they were originally offered. In 2008, after Northern Rock was nationalised and divided into the “good” and “bad” banks, the state-owned part failed to ensure these statements were made. In the absence of that mandatory information, “borrowers are not liable for interest”, the Treasury said.

Yup, if you don\’t tell peeps the amount of the original loan then you can\’t charge interest. Ghastly error etc etc. And do note it was the state run part that got it wrong. An interesting counterblast to that idea that we should have state run investment banks, eh?

But it does help to explain that HSBC, and the Standard Chartered and other, case(s). They\’re not being fined because they handled the criminal bastards\’ money. They\’re being fined because they didn\’t get the paperwork right to prove that they weren\’t handling the criminal bastards\’ money.

And even the Government gets such paperwork wrong at times, eh?

5 thoughts on “Anyone surprised HSBC got fined?”

  1. But why does Northern Rock have to pro actively give that interest back? Surely it’s up to the consumers to figure it out and demand it back – in court if necessary? Of course once word gets out, they’ll all do it anyway.

  2. So Much For Subtlety

    I am not surprised. HSBC has got a lot of money. A lot of politically connected lawyers want a lot of money. The Feds partly fund their activities these days with the proceeds of fines.

    Naturally there is a strong interest in writing laws so complicated no one can understand them and then using the courts to extort large sums of money out of the rich.

    States, and especially their minions, should never financially benefit from prosecuting people. We are just back in the days when informers were given a slice of the action.

  3. Luverlly.

    Person who brings about legislation regarding illegal immigrant workers gets it wrong? 50% of the maximum fine.

    People running State owned bank get it wrong? Nothing.

    Multi-national bank gets it wrong?

    Fine the size of the GDP of a small European country…

  4. There’s no question that compliance breaches are now seen by authorities (especially in the USA but in Europe too) as just another revenue stream. Set a sum which is high enough to be worth levying but too low for the bank to bother risking taking to court – alongside the risk of further sanctions while the court thing is playing out – and you have a nice little protection racket going on. For which the customers end up paying.

  5. But why does Northern Rock have to pro actively give that interest back?

    If I take money from you that I’m not entitled to take (even without intent, so not theft), and I get caught, and I have a list showing all the people I’ve taken the money from, it doesn’t seem particularly unfair to make me give the money back without the people I took it from having to claim it.

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