The Hong Kong Securities and Futures Commission (SFC) has imposed a monetary penalty of HK$2.1m ($268,000) against HSBC for failing to adhere to the telephone recording requirements at its private banking division.
The financial watchdog said that HSBC did not enable voice recording on some private banking service lines.
As a result, 5,830 client order instructions were not tape-recorded between 8 April 2017 and 31 January 2018.
In a statement, the SFC said: “The SFC considered that HSBC has failed to put in place effective internal control procedures to ensure proper implementation of the telephone recording function and timely detection of any telephone recording failures.”
According to the regulator, the lapse was likely triggered by an “inadvertent manual error made by a system engineer” during the recording system’s routine system or configuration changes.
It was found that the new engineer group which was responsible for the upkeep of the telephone system from June 2017 was unaware about the previous team’s practice of pre-setting the recording function by default for shared telephone lines.
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In ascertaining the fine, the SFC considered that HSBC self-reported the matter to the SFC and the Hong Kong Monetary Authority, implemented remedial measures and collaborated with the SFC in resolving its concerns.
Also, HSBC consented to appoint an independent reviewer to evaluate the effectiveness of the remedial actions undertaken.