HSBC has been fined £6.3m by the Financial Conduct Authority (FCA) for its mistreatment of customers in financial difficulty.

The regulator found that between 2017 and 2018, HSBC had failed to properly consider some customers’ circumstances when they had missed payments.

This meant that the bank did not always do the right affordability assessments when entering arrangements with people to reduce or clear their arrears, the FCA said.

According to an investigation by the regulator, the failings were caused by deficiencies in HSBC’s policies and procedures and the training of its staff, as well as inadequate measures to identify instances of unfair customer treatment.

Joint executive director of enforcement and market oversight, Therese Chambers, said: “People must be able to trust their lenders to treat them fairly when in financial difficulty. By failing to do so, HSBC put 1.5 million people at risk of greater financial harm.”

In 2018, the bank identified that there were issues with its handling of customers in financial difficulty and notified the FCA. HSBC invested £94m in identifying the issues while the bank also issued redress payments totalling £185m to over 1.5 million customers.

The FCA took this remediation and redress programme into account when setting its fine. HSBC also agreed to settle the case and qualified for a 30% discount to the financial penalty imposed, which otherwise would have totalled £9m.

Chambers added: “[HSBC] deserves credit for identifying the issue and putting it right. The cost it has incurred in doing so, however, should be a warning to all lenders that they need to understand their customers’ circumstances so as not to make a bad situation worse.”

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