Banking giant HSBC has disclosed details of a potential new mis-selling scandal as it prepares to launch a review of investment advice given to wealth management customers over a four-year period.
The group said it had set aside £93 million to cover the cost of the review, due to begin next year, and any customer redress.
HSBC also disclosed that it had become the latest bank to be drawn into a worldwide probe into foreign exchange trading.
The revelations threaten to overshadow improving earnings for the business, which saw underlying third quarter pre-tax profits increase to £3.17 billion, a 10% improvement on the same period last year.
HSBC, like other banks, has already made massive provisions for mis-selling payment protection (PPI) and interest rate protection products, with the latest disclosures seeing the total pot swelling to more than £2bn.
Third-quarter results from the bank showed an additional £92m was put aside for PPI and £83m for interest rate protection.
But for the first time, customer redress provision also included the figure for wealth management, which was greater than either of the other two for the three-month period and brought the total additions to £268m.
The bank’s review of this area, to begin in the first quarter of next year, will cover the period from 2008 to 2012.
It said the majority of sales personnel were no longer with HSBC as they left the business as it prepared to comply with new regulations on financial advice that came into effect at the end of last year.
HSBC’s disclosure that it has been contacted by the Financial Conduct Authority over foreign exchange trading comes after reports last week that RBS and Barclays traders were suspended over similar allegations.
HSBC said in its case none of the traders said to have been involved were still working for the bank and no employees were suspended.
It had re-invested some of the £2.8bn savings it had achieved since the start of 2011 by increasing its “risk and compliance” workforce by 1,600 since last December.