News & Insight

HSBC and RBS are fast becoming a national disgrace

Christian Nellemann

Hundreds of small businesses are considering legal action after HSBC froze their accounts.

This week it’s emerged that hundreds of small businesses are considering legal action because HSBC froze their accounts during a crucial trading period.

Meanwhile, the UK’s financial watchdog is now condemning RBS for dragging its heels in compensating small businesses mistreated during the financial crisis.

Both are timely reminders that the UK’s major banks simply don’t act in the interests of small businesses.

What’s a few hundred SMEs to the UK’s biggest bank?

In 2012 HSBC was fined £1.2 billion over its involvement in money-laundering schemes run by drug cartels in Mexico (but don’t feel too sorry for them – they recently posted global profits of $4.6 billion).

As a result, HSBC is on a money-laundering crackdown, leading to forms being sent to customers earlier this year. And when, predictably, many small businesses simply didn’t have time to fill in the forms, they were locked out of their accounts. You can probably guess what happened next: they phoned HSBC to resolve the issue, and were left on hold for hours while their sales suffered.

What you have here is a catalogue of errors in understanding the customer – ironic given that the forms were entitled ‘Know Your Customer’.

Small businesses have no free time, and miss arbitrary forms sent in the post. You have to be patient; you have to follow-up by email and phone; and you have to accept that the reason they’re not responding is probably because they’re too busy just trying to survive. What you absolutely don’t do is just blindly shut down their services.

If I shut down my customers’ broadband connections every time they were too busy to respond to us about some administrative matter, we’d be out of business.

And then, to rub salt in the wounds, you have customer service that simply isn’t built to respond to serious issues quickly. HSBC failed small businesses – but they probably don’t even care. Because what’s a few hundred small business customers to the UK’s biggest bank?

RBS is out of control; it’s an apex predator

Few of us have forgotten that RBS were bailed out by the taxpayer during the financial crisis. But what many of us don’t realise is at the exact same time RBS’ Global Restructuring Group (GRG) were forcing small businesses into bankruptcy in order to profit from their demise. The whole episode is as good an example of a morally defunct company as you could ever find.

And almost a decade after the financial crisis, it’s been revealed that RBS is processing compensation claims extremely slowly. Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), has had to tell RBS’ CEO to ‘get his act together’.

Time will tell whether he does, but it’s worth remembering what’s happened to many of the victims. The news coverage of this story talks about compensation to ‘small businesses’ but most of them are no longer running a company. And RBS’ treatment not only ensured the break-up of businesses, but of families: there have been reports of people losing their homes and suffering serious mental health issues as a result.

Like HSBC, RBS neither understand nor care what it’s like to run a small business. And like HSBC, the problem lies in the sheer size and power they’re able to yield. When trying to stop abuse from giants like these, the government is toothless. RBS is an apex predator – and authorities like the FCA can do nothing to stop them.


  • Christian Nellemann is the Founder and CEO of XLN, a provider of low-cost phone, broadband, energy and card processing services exclusively to small businesses. A serial entrepreneur, he’s a two-time winner of Ernst & Young’s Entrepreneur of the Year award and one of only 17 inductees into their Global Hall of Fame. He is passionate about small businesses, and is a featured columnist for
  • Follow him on Twitter @christianxln