HSBC UK Bank Plc · DRN-3819931

The complaint A limited company, which I’ll refer to as ‘Q’, is unhappy with the service it received from HSBC UK Bank Plc surrounding restrictions placed on its business accounts and the recalling of its Bounce Bank Loan (“BBL”). Q is also unhappy that HSBC didn’t record telephone calls that took place between its director and HSBC’s relationship manager. One of Q’s directors, Mrs Q brings this complaint on the company’s behalf. What happened In June 2020, Q successfully applied to HSBC for a BBL and received the loan funds shortly afterwards. Later that year, Q successfully applied for a Coronavirus Business Interruption Loan (“CBIL”) with another lender, the funds from which Q received into its HSBC business account. This prompted HSBC to contact Q and to explain that it wasn’t permitted to have a BBL and a CBIL simultaneously and to request that Q repay one of the loans. In June 2021, one of Q’s directors spoke with the company’s HSBC relationship manager, at which time it was agreed that Q would be allowed to keep both loans on the understanding that Q would repay the BBL in full in February 2022. However, in December 2021, Q received notice from HSBC that they were no longer willing to offer banking services to Q and that Q’s business accounts would be closed in two months’ time. Shortly afterwards, Q received a further notice from HSBC that they were terminating the BBL agreement and demanding immediate repayment of the outstanding BBL amount. Q’s directors weren’t happy about this, or that HSBC had restricted Q’s business accounts in the lead up to making their decision to no longer offer banking service to Q, and so raised a complaint on Q’s behalf. HSBC looked at Q’s complaint. They confirmed to Q that a BBL and CBIL couldn’t be held simultaneously and explained that Q’s accounts had been restricted while HSBC complied with their UK statutory obligations. HSBC also reiterated that the decision to no longer offer banking services to Q still stood. Q’s directors weren’t satisfied with HSBC’s response, so they referred Q’s complaint to this service. One of our investigators looked at this complaint. But they didn’t feel that HSBC had acted unfairly in how it had managed the situation, and so didn’t uphold the complaint. Q remained dissatisfied, so the matter was escalated to an ombudsman for a final decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I’d like to begin by confirming that this service isn’t a regulatory body or a Court of Law and doesn’t operate as such. This means it isn’t within my remit to declare that HSBC have or haven’t acted in a non-regulatory or unlawful way - such declarations would be for a

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regulatory body or a Court of Law to potentially make. Instead, this service is an informal, impartial dispute resolution service with a remit focussed on fairness of outcome. Q’s directors have explained that when they took the CBIL with another lender, it was explained to them by that lender that it was permitted to hold a BBL and a CBIL simultaneously. However, it’s clear from the website of the British Business Bank (“BBB”), which managed both the BBL and CBIL schemes, that this wasn’t the case. As follows: “Businesses are not permitted to access more than one of either the Bounce Back Loan Scheme, CBILS, CLBILS or the Covid Corporate Financing Facility (CCFF) scheme at the same time.” Regardless of what Q’s directors were or weren’t told by the other lender that provided the CBIL to Q – the details of which fall outside the scope of this review – I feel that it was incumbent on Q’s directors to have understood that it wasn’t permitted for Q to receive a CBIL having already received a BBL. The receipt of the CBIL into Q’s HSBC business account led to a review of Q’s accounts by HSBC which ultimately resulted in its decision to no longer offer banking services to Q. This is a commercial decision that I’m satisfied HSBC were entitled to make, and I note that it’s included in the terms of HSBC’s business accounts that HSBC can close a customer’s accounts, usually with two months’ notice – which I’m satisfied that HSBC provided to Q in December 2021. However, it doesn’t necessarily follow from the above that the closure of Q’s accounts was taken by HSBC fairly, and I’m aware that Q’s directors would like to better understand the reasons that HSBC made the decision to cease offering banking services to Q as they did. HSBC aren’t obliged to provide any further information to Q than they’ve already provided. But, in order for this service to assess the fairness of HSBC’s actions, HSBC have provided their reasoning to us. And, having considered this information, I’m satisfied that HSBC’s decision to no longer offer banking services to Q was reasonable and that HSBC haven’t acted unfairly in taking that decision or in the actions that resulted from it. I realise that this explanation may not fully satisfy Q’s directors, but as explained, HSBC aren’t obliged to provide any further information about their reasoning to Q, and it’s beyond my remit here to consider asking them to do so. I hope Q’s directors can take some comfort knowing that someone impartial has considered HSBC’s rationale on their behalf. Q’s directors have explained their HSBC’s relationship manager agreed with them in June 2021 that Q could keep both the BBL and the CBIL funds on the understanding that Q would repay the BBL in full in February 2022, and they’re unhappy that HSBC don’t retain recordings of this and other calls that they held with their relationship manager in this regard. HSBC have explained that because the calls took place on the relationship manager’s mobile telephone, these calls weren’t recorded. However, call notes as inputted by Q’s relationship manager do exist. These include a call dated 30 June 2021, where the relationship manager notes that he explained to Q’s director that Q is in breach of scheme rules as it can’t have both a BBL and a CBIL, and where repayment of the BBL is discussed. Upon reading these notes I can appreciate how Q’s directors may have felt that the keeping of both the BBL and CBIL funds by Q had been accepted by their relationship manager, at least up until February 2022 when Q intended to repay the BBL in full. But I don’t feel that this point supersedes the fact that Q’s holding a BBL and CBIL together wasn’t permitted by the rules of either scheme, and that HSBC retained the right to review the position and to

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end the business relationship with Q at any time – which HSBC ultimately did on the basis of a rationale which, as previously confirmed, I’m satisfied was fair and reasonable. Finally, Q’s directors are unhappy that HSBC allowed money to be received into Q’s business account while the account was restricted so that money couldn’t be moved out of that account, and that HSBC then used the money that had built up in Q’s business account to offset the balance Q owed on the BBL. But such offsetting was permitted by the BBL agreement, and I don’t feel that it’s unreasonable for a lender that’s owed a significant amount of money, as HSBC was, to allow money to be received into a restricted business account. And while I can appreciate that this may have put Q into a difficult financial position, I can only reiterate the point I’ve made previously above, which is that ultimately it was the responsibility of Q’s directors to have understood and mitigated against the fact that Q was engaging in borrowing that wasn’t permitted by the rules of the schemes which Q was borrowing against. All of which means that I don’t feel that HSBC have acted unfairly or unreasonably as Q’s directors maintain, and it follows from this that my final decision is that I won’t be upholding this complaint or instructing HSBC to take any further action. I hope that Q’s directors will understand, given what I’ve explained, why I’ve made the final decision here that I have. My final decision My final decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Q to accept or reject my decision before 8 March 2023. Paul Cooper Ombudsman

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