HSBC strike a negative note

Just received a copy of an email from Dominic Thorncroft, Chairman of the UK Money Transmitters Association, that makes for interesting reading. 

It appears to be related to the issues the bank has faced with anti-money laundering fines in the USA, but the way the bank has handled the problem adds to a growing list of issues the bank has raised in recent years where decision making appears to be in the bank's, rather than the customer's, interest (think student overdrafts and Securekey).  

They need to tread the waters a little more carefully methinks.

Fellow money transmitter ...

Many of you will be aware by now that HSBC bank has, without
any prior warning, taken a global decision to exit the MSB (Money Services Business) sector and to close
all MSB bank accounts forthwith.  Some firms have been given no more than
30 days to find an alternative banking provider.

We are sure that many of MTA members will have been
negatively impacted by this news – we believe this decision could effect at
least 100 PI (Payments Institutions)/MSB companies in the UK.

Whilst we cannot contest the bank’s right to take a
commercial decision, we can have concerns about the process and the
timing.   Giving MSB 30 days to find alternative banking providers is
asking the impossible and puts their business viability in serious
jeopardy.   There must be a question as to whether HSBC is treating
its customers fairly.  The FSA (Financial Services Authority) may have genuine concerns about whether the
safety of clients funds can be guaranteed during this process.

Nor can we assume that other banks in the MSB sector are
entirely comfortable about the HSBC decision.  In practice, we know that
banking in this sector is concentrated with a very few high street banks. 
These banks will find it operationally impossible to open accounts for all the
business they want to take on within the time scale imposed by the HSBC
decision. Additionally, no single bank likes to be in a position where it is
providing banking services to a disproportionately large section of the total
number of businesses.  And, of course, this situation cannot be in the
interests of consumers since a truly competitive market does not exist.

We must do more to encourage other banks to get involved in
banking the MSB sector – it is in the interest of the sector as a whole that
there is a wide diversity of banking provision.   As an association,
we would be pleased to hear if members are aware of new banks which are
providing services to our market.

We feel that it is important that the UKMTA communicates our
view both FSA and HM Treasury to emphasise how destabilising the HSBC decision
is for the payment market as a whole.  And to request that
legislators/regulators do what they can to mitigate the impacts.

We would be interested in any comments you may have – please
let us know as soon as possible (ideally by end of this Friday) so we can
contact the authorities with our formal opinion so they can take action
quickly.

Regards

Dominic Thorncroft, Chairman, UKMTA