It stemmed from the Private Banking Division failing to set up or enable voice recording on 59 affected telephone lines.
The result was that 5,830 client order instructions were not recorded.
Under the SFC code of conduct, where order instructions are received by telephone, the calls must be recorded and retained for at least six months.
In deciding the penalty, the SFC took into account that HSBC:
- self-reported the failures to the SFC and the Hong Kong Monetary Authority (HKMA);
- took remedial actions upon discovery of the incidents; and,
- cooperated with the SFC in resolving the SFC’s concerns.
HSBC also agreed to engage an independent reviewer to review the effectiveness of the remedial actions undertaken in relation to the maintenance and functionality of the voice recording system used by its Private Banking Division.
It will also submit the review report to the SFC and the HKMA to ensure its compliance with the regulatory requirements.