HSBC has set aside $149 million to review how it advised about 200,000 UK customers on investing a lump sum of money, the first British bank to do so and signalling another potential costly mishap for lenders.

HSBC chief executive Stuart Gulliver said yesterday about $120 million of the money set aside will pay for the cost of its review, indicating only a fifth of the provision had been earmarked for customer compensation.

It follows a “mystery shop” or undercover review by Britain’s financial regulator to check on investment advice at six major lenders released in February. That found unsuitable advice had been given 11 percent of the time and firms did not gather enough information in a further 15 per cent of cases.

One of the companies was put under investigation for possible investment advice failures, which could result in a fine. That firm was Santander UK, four industry sources told Reuters at the time.

HSBC is the first bank to specifically set aside money for the issue, included in third-quarter results.

“The Financial Conduct Authority (FCA) has said that suitability failures have been widespread in the industry, so it is unlikely that HSBC are alone,” said Rob Moulton, partner at law firm Ashurst.

The regulator’s study concluded that banks should review their past business “to identify historic poor advice and put this right for customers”. Banks were told to employ an independent company to carry out or oversee the work.

HSBC hired Grant Thornton to review its sales.

“The outcome of that is we need to go back to 2008 and check how we sold wealth management products to about 200,000 clients,” Gulliver said.

He said his bank was being “prudent” by stripping out the operational cost of doing the process. It was not clear if other banks faced similar costs and, if so, would strip them out or just include them in routine operational costs. – (Reuters)