Case Studies Blog

Another day another banking scandal

9th February 2015

The revolving door of banking scandals appears to show no sign of abating. This time it is HSBC who is accused of aiding wealthy individuals to evade tax. Of course the key to this story is not that HSBC helped clients evade tax (that is merely a service) but whether HSBC helped its clients break the law to do it. This has always been a rather murky area which is now coming under increasing scrutiny as international tax avoidance treaties start to have an impact. This particular scandal came to light as a result of leaked account details rather than by the co-ordinated efforts of governmental tax regimes but I am sure there will be many more of these types of scandals still to come. Doubtless HSBC will have to pay a heavy fine in due course if wrong doing is proven but that is likely to be the extent of the pain inflicted and life will move on.

So what of the impact on business for HSBC? I suspect very little will change. Customers are becoming resigned to the fact that banks seem to be able to operate with impunity, pay the fine and move on. At least that is the impression on the surface.  Looking beneath the surface the impact is considerable. From the customer’s point of view an already bad situation is getting worse.  More regulation has made the already onerous processes of getting a mortgage or a business loan even more difficult. More hoops to jump through means transactions are taking longer. In spite of concerted efforts by governments to make loans available the reality on the ground is that banks are becoming increasingly cautious about lending and the advice they are prepared to provide to businesses is increasingly limited.  Alternative sources of lending and financial advice are there but they are often more expensive and less easy to access for small and medium sized businesses.

If European growth is going to be fuelled by a proliferation of vibrant and rapidly growing SMEs across Europe, we had better hope that the lofty intent to provide ready access to capital actually translates into the reality on the ground.