LONDON (Reuters) - After a year laying the groundwork for his Karachi-based clothing company’s expansion to Europe, businessman Abdul Aziz was poised to start delivery to British shops such as TK MAXX.
That was before HSBC (HSBA.L) froze his corporate account around August 10 last year, catching Aziz up along with scores of other unintended victims of the bank’s crackdown on money laundering whose cases have been reported by Reuters.
The 12-week freeze on international payments cost Aziz’s company, Safetex, those customers, he says. Now he may soon be in breach of the terms of his Tier 1 entrepreneur visa, which allows him to run his business in Britain only if specific conditions are met about the number of people he employs and the income he earns.
“The account freeze has meant I’ve lost my customers, payments to my company stopped, the business is on the verge of collapse and I’m facing having to return to Pakistan and start my life from scratch,” Aziz told Reuters.
HSBC says it is investigating the merits of Aziz’s claim of two million pounds in compensation and is trying to resolve the issue as quickly as possible.
“We have listened to our customers and made a number of significant improvements since last year,” spokesman Michael Clarke said this week when asked about Aziz’s case and others.
“But we recognise mistakes still occur, and we are working hard to put things right and to make the process as simple as possible. We deal with complaints as a matter of urgency to minimise any impact on our customers.”
HSBC’s problems, first reported by Reuters last August, stem from a $1.9 billion fine imposed in 2012 by the U.S. Justice Department and financial regulators who found it had allowed itself to be used to launder drug money from Mexico.
The bank tightened checks on its customers and has acknowledged freezing the accounts of hundreds of small business customers, without specifying where they were located.
The bank says it has improved internal communication and training and hired more staff in order to be able to handle complaints quickly.
But interviews with HSBC customers, letters and emails from the bank seen by Reuters and a review of the lender’s social media complaints channels show some problems continue.
The number of affected UK businesses is a tiny percentage of all business accounts at HSBC, but they are in the small and mid-sized sector which the government has said it wants to encourage and hopes will thrive after Britain leaves the European Union.
More than 40 businesses have written to Reuters since last August to share their stories, many saying they were prompted to do so only after they felt they were being ignored by the bank.
According to their accounts, backed up by emails and letters between the parties, cases have taken weeks and even months to resolve. In more than fifteen cases, the frozen accounts were unblocked only after Reuters brought the bank’s attention to them during the course of its reporting, the account holders said.
Six account holders said they had been given compensation ranging from hundreds to as much as 3,000 pounds.
Beyond acknowledging Aziz’s claim, HSBC declined to comment on specific cases. The spokesman said the bank was sorry for any cases “where we have not reached the high level of customer service we strive for”.
Many of the complaints arise from recent incidents.
Clothing supplier Britwear, cookware manufacturer Home Cook Wholesale and charity Ganet’s Adventure School Fund are among five businesses which contacted Reuters in the last month to say their HSBC accounts had been frozen for weeks.
All three accounts were restored within days of Reuters contacting the bank to ask about their cases.
Steve McInerny, a media executive who is also chair of Ganet’s Adventure School Fund, which supports a school in rural Malawi, said the charity was frozen out of its account for six weeks from mid-May to the end of June.
“The direct effect of this was we were unable to send funds to the school in Malawi we support to build toilets for its nursery classes,” McInerny said.
The account was unfrozen after McInerny approached Reuters and the Financial Ombudsman, he said.
Ombudsman spokeswoman Debbie Enever said it assisted some businesses who approached it after logging a complaint with the bank. She did not have data on how many customers the ombudsman had helped.
“From speaking to people who’ve had their business bank accounts frozen suddenly, we’ve heard about the significant stress and upset it can cause,” Enever said.
Banks worldwide have in recent years shut thousands of customer accounts as they seek to avoid fines from U.S. authorities for abetting money laundering and sanctions-busting.
Editing by Sonya Hepinstall