UK Banking Reform

Structural Reform of the UK banking sector

The Financial Services (Banking Reform) Act of 2013 is a UK Government proposal aiming to impose higher standards of conduct on the UK’s banks. It also looks to improve their loss-absorbing capacity and outlines plans for the “ring-fencing" of retail and wholesale banking activities.

Overview

What is the UK Banking reform?

After the global economic crisis, the UK Government put new rules in place to protect the economy and taxpayers, in case something similar happens again. This means that HSBC must:

  • Separate its retail banking operations from any wholesale and investment divisions
  • Change the way it is structured in the UK – creating a new ring-fenced bank, HSBC UK
  • Make the changes before 1 January 2019 – to achieve this, we intend to complete required activities well ahead of the deadline.

What does this mean for Global Banking and Markets clients?

There will be very little change for the vast majority of our Global Banking and Markets (GBM) clients. GBM customers will continue to bank with HSBC Bank plc and benefit from our international network and the ring-fenced bank where appropriate. Equally, customers of the ring-fenced bank will continue to benefit from our international network and our investment banking solutions.

However, we will need to make some changes:

1. Sort code changes

  • A small number of GBM clients will need to move to a new sort code. This is because sort codes can only be allocated to one bank and a few of our existing ones will need to be adopted by HSBC UK.
  • We have already contacted those clients that will need a new sort code. If this applies to you, you can read more in our Sort Code Changes Brochure.
  • Ring-fencing impacts banks in the UK with deposits of GBP25bn or more so, if you have accounts with another impacted bank, you may receive similar communications from them.

If HSBC has not already contacted you, it's unlikely that you will be affected by the changes.

2. Qualification declaration

  • The ring-fencing rules mean that any entity that continues to bank with HSBC Bank plc that is not a Relevant Financial Institution (RFI) must go through a qualification process to confirm that it meets certain criteria.
  • For corporates and partnerships (not in their first year of trading) the following criteria is used to determine which clients will remain part of HSBC Bank plc. This is a once only exercise for existing customers and is based on the latest financial accounts. At least one entity in their corporate group must have:
    • Turnover: equal to or greater than GBP6.5m
    • Balance sheet total: equal to or greater than GBP3.26m
    • Number of employees: equal to or greater than 50.
  • If you have any questions about the qualification process, please contact your Relationship Manager.
Customers remaining in the non-ring-fenced bank (HSBC Bank plc) Customers part of the ring-fenced bank (HSBC UK)
  • All our Global Banking and Markets customers in our wholesale and investment banking division
  • UK commercial customers categorised as Non-Bank Financial Institutions, including Relevant Financial Institutions (RFI), and customers of non-UK branches of HSBC Bank plc, including Channel Islands and Isle of Man customers.
  • HSBC personal and commercial customers in the UK
  • UK retail brands M&S Bank and first direct
  • UK Private Bank Customers

Marks and Spencer Financial Services plc (MSFS) and HSBC Private Bank (UK) Limited (PBGB) will be subsidiaries of HSBC UK.

All our affected customers will be notified of these changes but, if you have any questions, please contact your Relationship Manager.

We don't anticipate any changes to our terms and conditions (other than changing the legal entity name for HSBC UK customers). If your money is eligible to be protected under the Financial Services Compensation scheme (or other similar schemes), it will still be covered as it is today.

Where to do for more information

For general questions, including sort code changes and the qualification process, see our client FAQs.

For more information about ring fencing visit:

For more detailed questions, please contact your Relationship Manager, or your Case Manager if you have been assigned one.

Last updated: 22 June 2017

FAQ

General ring-fencing

What is ring-fencing?

After the global economic crisis, the UK Government put new rules in place to protect the economy and taxpayers in case something similar happens again. The rules say that banks will have to separate their retail banking operations from their wholesale and investment banking divisions.

So we're changing the way HSBC is structured in the UK. It means our personal and commercial customers will move to a new part of the bank, HSBC UK. There will be very little change for the vast majority of our Global Banking and Markets (GBM) clients. GBM customers will continue to bank with HSBC Bank plc.

Are all UK banks impacted by the new rules?

The Banking Reform Act (ring-fencing) impacts most large banks in the UK. Specifically those with deposits of GBP25bn or more (Barclays, RBS, Lloyds, Santander and HSBC). If you have accounts with more than one bank in the UK, this may mean you will receive similar communications from them too.

Will ring-fenced bank clients still have access to the global network? And will international clients have access to the UK?

HSBC's international network will continue to be available to UK clients as is provided today. Equally, clients in other markets around the world will still be able to access HSBC's UK capabilities in the future.

I've received some other letters about changes to my accounts as a result of ring-fencing rules. How do I know this is not fraud?

Vigilance is key. Other banks may also be undertaking similar changes.

However, if something does not look right or you have any concerns regarding your HSBC accounts, please contact your relationship manager, or case manager if you have been assigned one.

Sort Code changes:

Why are you changing my sort code?

Our sort codes are aligned to either the ring-fenced bank or non ring-fenced bank, but a small number of sort codes are currently shared by both ring-fenced and non ring-fenced bank customers, therefore we will need to move some customers to different sort codes which are aligned to the correct bank.

When will my sort code change?

We have grouped customers according to the changes required and we'll notify you regarding the changes to your accounts and if there is anything that you'll need to do. Most of the changes will occur in 2017. If HSBC has not already contacted you, it is unlikely that you will be affected by the change.

Are any fraud risks expected through the sort code migration?

We do not anticipate any new fraud risks to arise due to UK ring-fencing and in particular the sort code migrations. However, there may be increased opportunity for existing fraud risks such as phishing and invoice fraud due to the amount of change across the industry. As part of UK ring-fencing, we will not be asking our clients to do anything that goes against our usual fraud prevention approach.

You should be aware that other banks impacted by UK ring-fencing may also be migrating their clients sort codes and accounts.

Please continue to follow our standard tips on fraud prevention:

  • Engage company staff in fraud awareness and education. Especially those who initiate payments on behalf of your company.
  • Validate any change requests of beneficiary details using alternate channels:
    • Call back using registered records (Do not use numbers mentioned in the email).
    • Do not use the "Reply" option to respond to the e-mail asking for change of beneficiary account details. Type the email address or select from your address book.
  • Do not access company email via a public device or free Wi-Fi.
  • Be mindful of information shared on social media / Do not disclose hierarchal information in the out-of-office details.
  • Ask for contact details and initiate a call back using the contact number from your own records or official listings or terminate the call.
  • If the caller claims to be from HSBC, and you are suspicious for any reason, call your Case Manager or Relationship Manager to help validate the caller information.

Additional information on our approach to fraud protection can be found on the website:

Where can I get more information from about the sort code change?

We've created a brochure on the sort code change that applies to our personal and the majority of our commercial customers in the UK, which provides you with all the necessary details and answers to many of your questions. If you have further questions about how the sort code change might affect you as a Global Banking and Markets client, please contact your relationship manager.

Qualification Declaration:

What are the qualifying criteria?

For corporates and partnerships (not in their first year of trading) the following criteria is used to determine which clients will remain part of HSBC Bank plc. This is a once only exercise for existing customers and is based on the latest financial accounts. At least one entity in their corporate group must have:

  • Turnover: equal to or greater than GBP6.5m
  • Balance sheet total: equal to or greater than GBP3.26m
  • Number of employees: equal to or greater than 50

If you have any questions about the qualification process, please contact your relationship manager. What is supporting qualifying evidence?

We can accept original forms of the following documentation as evidence:

  • A copy of the annual accounts for the latest complete financial year
  • A statement signed and dated by a recognised accountant
  • Audited accounts and/ or balance sheet, or
  • Records from Companies House (UK entities) or equivalent for your jurisdiction.

What if I'm unable to provide supporting qualifying evidence?

If you are unable to provide sufficient evidence that you or a member of your Group meet one or more of the qualifying criteria to bank with HSBC Bank plc, please contact uk.banking.reform.support@hsbc.com.

Which customers are impacted?

All customers that are not Relevant Financial Institutions (RFIs), in the UK and European Economic Area (EEA) branches of HSBC Bank plc that are not transferring to HSBC UK.

Which customers are out of scope and why?

As per the ring-fencing legislation, RFIs and customers in the Crown Dependencies cannot be part of the ring-fenced bank and therefore must bank with HSBC Bank plc. These customers therefore do not need to go through this qualification exercise.

This does not apply to corporates or partnerships who are customers of subsidiaries of HSBC Bank plc.

How long do I have to respond to the Qualification Declaration letter?

Clients have 14 days from the time the communication is sent to provide qualifying evidence. This is in line with what is set out in the legislation.

Last updated: 22 June 2017