Following this column’s recent “ninety minutes of madness at HSBC” story, the bank has apologised to its customers in Hong Kong.
The ‘madness’ story told of the nightmare experience of a Hong Kong resident with a banking relationship with HSBC who failed in his efforts to open a joint account with his Hong Kong Chinese fiancée who also had an account with the HSBC. The story triggered comments from other unhappy customers who contacted this column with their tales of woe. After discussing these complaints with HSBC a spokesman said the bank was sorry customers were unhappy with the bank’s level of service.
“We aim to put our customers first and provide excellent service. We take very seriously any situations in which customers do not feel this has been the case,” this column was told by Adam Harper, HSBC’s Head of Communications, Hong Kong, and Regional Head of Communications.
The litany of complaints mostly relate to issues of identification. Bank staff on occasions will not give customers access to funds because, for example, their signature deviates slightly from the one on the bank’s records, even though the customer is standing in a branch with more than enough identification to ascertain they are who they say they are.
One woman recalls trying to make a foreign exchange transaction only to have her request rejected by the teller because she said her signature didn’t match the one the bank had on its records. The customer was then given a form to change her signature. She declined it, and solved her problem by moving to an adjacent teller who had been observing this increasingly heated dialogue, and quickly completed the transaction.
Another customer complained of poor service in obtaining a mortgage not because of identification problems but because staff from the mortgage department didn’t seem familiar with the bank’s products. The customer was given the wrong information, but more of this another time.
So what should people who find themselves with their head in their hands in exasperation do? The bank says customers should use the complaints section on its website.
One customer tried this after a series of frustrating incidents with staff at the bank and stated in her complaint that she wanted to change her relationship manager. She was contacted by the bank’s staff within 48 hours. “She was very good and listened to my complaint and was very sympathetic. She said she was going to deal with it.” said the customer. But her way of dealing with it was to tell the relationships manager there had been a complaint. At which point the complaints woman got back to the customer and told her, “Oh but he’s trying so hard and he says he’s going to do better. Can you give him another chance?” With some reluctance the customer agreed only to be let down again shortly afterwards. So she complained again online. This time she received an auto-generated message saying, “We are experiencing a high volume of emails at this time. There will be a delay in getting back to you.” She never did hear back and remains unimpressed with the service.
What has gone wrong with an institution that 20 years ago was well regarded for its customer service and viewed with some pride as a Hong Kong institution that was cutting a swathe through the international banking industry? The root of the problem is clearly the changes that HSBC along with other banks is being forced to implement to meet tight demands from regulatory authorities.
This follows a series of sensational revelations of the bank’s misdeeds. HSBC’s Swiss private bank was involved in helping hundreds of wealthy clients to evade tax and the bank. HSBC is in the middle of a deferred prosecution agreement with the US authorities for its lax controls which allowed Mexican drug cartels to launder money with ease. Along with other major banks HSBC has been embroiled in scandals which include the ‘fixing of foreign exchange rates and manipulating Libor . In addition it has been fined for the mis-selling of payment-protection insurance and interest-rate swaps in the UK. The bank’s chairman Douglas Flint in a humiliating appearance before a UK parliamentary committee at the beginning of this year conceded that, ”HSBC has a terrible list of problems.”
HSBC along with other banks is under pressure to change the way it does business. “In today’s increasingly connected global financial system, there is a greater need for security in the banking industry. HSBC has a responsibility to know our customers well enough to meet their needs, at the same time as fulfilling our legal and regulatory obligations by adopting the most effective controls to prevent financial crime,” says Harper.
He goes onto say that HSBC has, “put in place enhanced account opening policies and procedures to help us know and understand our customers better.” The upshot of this, he says, is that, “we may request our customers to confirm, update or provide new information when opening an account or conducting a regular review of their portfolio. We may also ask more questions than in the past, for example, to understand particular transactions or the source of their wealth and funds.”
It is fair to say that people generally recognise the need for enhanced due diligence over identification and source of funds. But what infuriates them is the “stupid and unthinking manner in which these checks are being conducted,” as one customer puts it. This points to an apparent lack of training. Some staff relentlessly ask questions without appearing to know why they are asking them, leaving customers bewildered and angry, as well as damaging the bank’s reputation. HSBC management privately acknowledges that it has not executed its ‘enhanced account opening policy’ very well. “We have fallen short,” he admits.
Asked what HSBC is doing to improve its customer service, the bank says it is “trying to do better.” Harper says, “We are working to make the process as simple as we can and to equip our staff to help customers complete the process as smoothly as possible.”
But all is not lost. There has apparently been an outbreak of common sense in London. One customer, a Hong Kong resident, described a situation where his daughter who has a UK passport was due to start university there and he wanted to set up an HSBC account for her in the UK. His daughter who was living in the university’s student residence duly appeared at an HSBC branch in London armed with various forms of identification including a letter from the university explaining that she was a student. To her surprise her application was rejected as she needed a UK utilities bill to establish her address. She was even more surprised to learn that fellow students from overseas which did not have UK passports had no trouble in opening an account. However it appears HSBC is adjusting its requirements and a provisional driving license will now suffice.
Customers are sceptical that the bank’s new policies are doing much to deter money laundering. Indeed they feel they are being subjected to a box-ticking exercise to get the regulators off the bank’s back. “We are paying the price for the bank’s misdeeds,” said one customer.
Another comment left on this website said, “The world’s banks and other financial intermediaries are now spending billions of dollars annually on this paperwork for very little societal benefit. It doesn’t materially impact drugs, guns or corruption, but we all pay the cost.”