Nov. 27 (Bloomberg) -- HSBC Holdings Plc’s updated compliance procedures would weed out products such as wrongly-sold loan insurance because they would be identified as too profitable, said Antonio Simoes, head of the bank’s U.K. unit.
A reputational risk committee scrutinizes very profitable trades and products, Simoes told a panel of the Parliamentary Commission on Banking Standards today.
Payment protection insurance “would have been picked up currently through our product approval procedures,” Simoes said. “One of the key issues we looked at was the profitability of the product and a product which is disproportionately profitable in our current processes would not have been approved.”
HSBC has set aside $2.1 billion after regulators ordered banks to compensate clients who were forced to buy, or didn’t know they had bought insurance to cover their repayments on mortgages, credit cards and other loans. British banks have made provisions of about 11 billion pounds ($17.6 billion) to redress consumers.
“PPI is an industry issue in which the industry has failed consumers and I believe we would not currently approve a product such as PPI,” Simoes said.
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