HSBC and the Muslim Charities – The Terminator Bank Strikes Again
Finsbury Park Mosque
My old friends at HSBC have put their foot in it again with their decision to withdraw banking services to a number of individuals and organisations. The bank explained its intention to its account holders in typically weasel terms. Apparently it considers the business with the affected parties to be “outside of our risk appetite”. That all those affected happen to be Muslim is surely a coincidence. Well it must be, because HSBC says so:
“Discrimination against customers on grounds of race or religion is immoral, unacceptable and illegal, and HSBC has comprehensive rules and policies in place to ensure race or religion are never factors in banking decisions.”
So perhaps it’s afraid that the account holders might be tempted to indulge in a spot of money-laundering. This is a sensitive area for the bank, since in 2012 it was stung for $1.9 billion in fines for allowing its Mexican subsidiary to be used by drug cartels for their nefarious activities.
Which leads one to wonder what HSBC know about their account holders beyond money in and money out, and what raised the red flag. Are we talking about funds transfers to Aleppo, Mosul or Gaza? And does the bank employ investigators to look at potentially dodgy customers? Or does it get tip-offs from shadowy representatives of the security services in the countries in which it operates?
The rejected customers all claim to be bemused by HSBC’s action. Several of them are charities, none of which are under investigation by the Charities Commission. Individuals include the teenage children of people running the charities.
One wonders who else might be beyond its risk appetite. If religion doesn’t come into the equation, then is the bank planning to target other charities that organise relief efforts in the world’s trouble spots or for the needy at home? Oxfam, perhaps, or those fanatics at Christian Aid. How about the uniformed, carol-singing crusader shock troops that the Salvation Army puts on the streets? And will its diminished appetite cause it to re-brand itself as The World’s Local (Apart From Gaza, West Bank, Syria, Iraq, Medellin and Acapulco) Bank?
Another aspect of the decision is the cack-handed way it chose to communicate with its customers. In this supposedly warm and cuddly world of customer intimacy, HSBC chose the most impersonal method of delivering the news: by letter.
This comes as no surprise to me. A couple of years ago my company in Bahrain received a similar letter, but without even an explanation as vague as in this case. After much nagging on my part, I managed to get the reason out of the bank: that all corporate account holders with an annual turnover less than $30 million were being culled. This was the cumulation of what appeared to be a “death by a thousand cuts” campaign to persuade us to move elsewhere: grossly inflated charges, no more cheque books, no more designated account manager. More on our wonderful experience – which persuaded me never to touch HSBC again with anything other than a well-charged cattle prod – in The Terminator Bank – A Tale of Modern Finance.
HSBC, of course, is a private company. It can do business with, and withdraw it from, whoever it wants to. But it should be aware that by targeting individuals and organisations without a convincing reason it is effectively stigmatising them. In this instance it is telling the affected customers: “you are too risky for us”. Implication: “we don’t trust you.” Will it be easy for the Finsbury Park Mosque, the Cordoba Foundation and the Ummah Welfare Trust – three of the organisations that received the bank’s billets doux – to make alternative arrangements? I doubt it, at least not with the other UK clearing banks.
Perhaps the risk HSBC has in mind has nothing to do with money laundering. But as far as I’m aware, none of the targeted customers are in debt to it or are failing to comply with any of its conditions, so the only risk I can think of is reputational damage. After all, nobody – whether it was HSBC or anyone else – is likely to want to be known as Abu Hamza’s former banker, even if the aforementioned “sheikh” is rotting away in an American jail and the Finsbury Park Mosque purged itself of his malign influence years ago. Yet the bank’s action will almost certainly have caused reputational damage to its customers.
The company, as a clearing bank, occupies a privileged position in the UK financial industry. Its activities and failures – as we saw with other clearing banks in 2008 – have wide ramifications both on the British economy and society as a whole. In return for that privilege it should operate at high standards that reflect its responsibilities. And that should include fairness, transparency and lack of discrimination in its dealings with its customers.
No doubt HSBC has done its homework and believes itself to be fireproof in this case. But in its lack of transparency and its impersonal communications style it comes over as cold and arrogant. Hardly a great advertisement for The World’s Local Bank.