HSBC 2014 Annual Report Download - page 173

HSBC BANK PLC
Notes on the Financial Statements (continued)
171
The extent to which the group is ultimately required to pay redress depends on the responses of contacted and other
customers during the review period and analysis of the facts and circumstances of each individual case, including
consequential loss claims received. For these reasons, there is currently a high degree of uncertainty as to the
eventual costs of redress related to this programme.
(iii) Provisions of £2 million (2013: £102 million) in respect of alleged failings in the sale of card and identity protection
products.
(iv) Provisions of £80 million (2013: £96 million) for the estimated cost of redress in relation to the provision for possible
mis-selling of wealth management products. The programme to redress customers is in an early stage. The main
uncertainty arises from the time to finish this project and the associated project costs.
(v) Provisions of £24 million (2013: £55 million) for the estimated cost of redress in relation to the provision of services
to a number of trusts by a subsidiary of the bank. The bank has undertaken to reimburse the subsidiary in respect of
the initial estimated cost of redress. The total provision is based on a calculation extrapolated from a sample of cases.
Uncertainties arise from factors affecting the timing of notifying and reimbursing those affected.
The group has undertaken a review of compliance with the fixed-sum unsecured loan agreement requirements of the UK
Consumer Credit Act (CCA). £243 million has been recognised as at 31 December 2014 within ‘Other liabilities’ for the
repayment of interest to customers primarily where annual statements did not remind them of their right to partially
prepay the loan, notwithstanding that the customer loan documentation did include this right. The cumulative liability to
date is £379 million, of which payments of £136 million have been made to customers. There is uncertainty as to whether
other technical requirements of the CCA have been met, for which we have assessed the contingent liability at up to £0.6
billion.
Also included in the above table, for the bank and group, are provisions for onerous property contracts of £67 million
(2013: £75 million) and £71 million (2013: £79 million) respectively, relating to the discounted future costs associated with
leasehold properties that have become vacant. The provisions cover rent voids while finding new tenants, shortfalls in
expected rent receivable compared with rent payable, and the cost of refurbishing the buildings to attract tenants.
Uncertainties arise from movements in market rents, delays in finding new tenants and the timing of rental reviews.
28 Subordinated liabilities
The group
The bank
2014
2013
2014
2013
£m
£m
£m
£m
Subordinated liabilities:
– At amortised cost
8,858
10,785
7,854
9,903
Subordinated liabilities
6,677
8,502
7,854
9,903
Preference shares
2,181
2,283
–
–
– Designated at fair value
2,856
2,768
2,856
2,781
Subordinated liabilities
2,526
2,445
2,856
2,781
Preference shares
330
323
–
–
11,714
13,553
10,710
12,684