Mortgage Overview

HSBC has guidelines covering commercial banking including lending to companies involved in mining, metals, energy, chemicals, freshwater infrastructure, forest land and forest products. These guidelines define activities it will not support (prohibited), and those it will only support if undertaken to a high standard (restricted), as well as other minimum standards and examples of good practice.

However, these guidelines to not constitute a strict company-wide policy.

HSBC’s Group Corporate Sustainability Risk Management team is responsible for providing Sustainability Clearance, developing policies, guidance and processes, training and working with Sustainable Risk Managers Group-wide. The team also manages the Group’s responsibilities in respect of the Equator Principles to which the bank is a signatory. 

1. Credit Lending 

HSBC offers LTV (loan-to-value) mortgage rates between 60% and 90%. These compare favourably with the FSA’s Turner Review suggestion of a maximum LTV of 90%, i.e. the borrower should have at least a 10% deposit. 

The bank does not use LTI (loan-to-income) rates to provide guidance for mortgage customers. It states that it looks at customers’ ability to afford a mortgage by taking into account factors such as credit commitments and the number of dependants – but it does not disclose specific limits on the amount of available credit. 

In assessing applications for unsecured credit, the bank says that credit scoring may be applied. This uses information supplied by the applicant as well as that obtained from credit reference agencies. 

No information was found as to whether the bank has a policy to avoid or prevent offering unsolicited increases in credit limits to customers. 

2. Debt Warning

The bank issues the following warnings to its mortgage customers:

• ‘Think carefully before securing other debts against your home.’
• ‘Changes in exchange rates may increase the sterling equivalent of your debt.’
• ‘Your home may be at risk if you do not keep up repayments on your mortgage.’

With regard to unsecured credit the bank outlines the consequences of default on personal loans in its pre-contractual terms and conditions. These include sending the customer an initial default notice and the potential disclosure of information about the borrower’s conduct to credit reference agencies and the possible ‘last resort’ of passing the matter to a Debt Collection Agency. Other pre-contractual warnings include the statement: ‘Missing payments could have severe consequences and make obtaining credit more dificult’.

The bank refers customers to the FSA’s Debt Test under the heading ‘What you should know before you apply’. This test is designed to help customers find out whether they have, or are likely to have, problems with borrowing. 

3. Debt Management and Advice 

The bank states that it encourages customers to make contact if they are having difficulty with their mortgage repayments and that it looks at each case individually.  

However, it does not provide a clear set of steps with regard to the repossession process, nor does it outline how it may help customers restructure their mortgage payments. It offers a small amount of generic advice to customers, but does not, in publicly available materials, outline specifically what it might do for its own customers. 

The bank states that repayment holidays are not part of the standard mortgage proposition but that amended repayment structures may be considered. 

No evidence was found that the bank offers re-housing advice or liaises with organisations such as Shelter and the Citizens Advice Bureau to work out re-housing arrangements with mortgage customers facing repossession.

HSBC offers a basic bank account which can be accessed in the same way as regular current account and at the Post Office.  The bank also offers a Passport Bank Account to new migrants.

Many branches are fitted for disabled access. Branches in areas with a high local ethic population have members of staff who can deal with customers in their own language.

The bank has also been involved in a variety of microfinance projects, recently in Asia and Latin America. They state: ‘Our approach is to engage with the microfinance sector on a commercially viable and sustainable basis, not as philanthropy.’