FCA draws ire over decision to drop action against HSBC over aiding tax avoidance
05 January 2016
HSBC has escaped punishment over tax-dodging, embroiling the finance services watchdog in a controversy after it scrapped a probe into the scandal-hit banking culture.
The bank's Swiss private operation was accused of routinely helping super-rich clients avoid tax.
But it emerged last night the Financial Conduct Authority (FCA) has decided not to pursue formal action against it.
The revelation comes only days following the watchdog dropping an inquiry into banking scandals. It had also emerged that seven foreign investment banks in London had failed to pay corporation tax.
The banking scandals had fuelled worries that ministers and regulators were becoming more lenient towards banks as the economy recovered. Liberal Democrat leader Tim Farron had claimed it was 'business as usual' again in the financial services sector.
HSBC faced charges of ignoring illegal activity after Hollywood actors, politicians, sports stars and celebrities were found to hold secretive Swiss accounts.
The FCA started a 'deep dive' examination of the private bank arm last year, but, it told HSBC chiefs months ago, that there would be no formal inquiry, and it did not need to make the decision public, which became public knowledge only last night.
The reluctance of UK officials to pursue HSBC contrasted sharply with its aggressive stance vis-à-vis other banks.
Meanwhile, Swiss authorities fined HSBC £28 million last year after money laundering came to light at its Swiss arm, while in France the bank faced a criminal investigation into alleged 'aggravated money laundering and financial fraud'.
The FCA offered no comment on the decision, first reported by Sky News, In February 2015 it had said the leak of the bank account details ''has served to reinforce the importance of firms operating with the right culture across all of their operations''.
Martin Wheatley, the then chief executive of the FCA, said, ''The allegations are about a Swiss unit of the bank, based on events of predominantly 2005-2007 ... We are very closely monitoring the ability of the bank overall … and we think significant improvements have been made''.