HSBC tax leaks: Bank of England could investigate, says deputy Governor

Sir Jon Cunliffe said serious issues around HSBC's conduct had been raised

The Bank of England, through the Prudential Regulation Authority, has been in charge of the oversight of banks since 2013 (AFP/Getty Images)

The Bank of England could investigate allegations that HSBC helped clients avoid tax, the deputy Governor of the Bank of England has said.

“The allegations around HSBC raise serious issues around HSBC’s conduct,” Sir Jon Cunliffe, who is responsible for financial stability, said.

HSBC has admitted failures in compliance and controls at its Swiss private-banking arm which saw thousands of wealthy customers allegedly conceal millions of pounds and avoid tax up to 2007.

The bank has also said it has completely changed its systems and cut back the size of its Swiss operations.

“We’d expect the management, the leadership of a large group, to be able to ensure that there is a culture and the operations within that group to manage those sorts of risks,” Cunliffe told BBC Radio 4.

“This is certainly something that could be of relevance to us.”

His comments came as it was revealed that the whistleblower who started the tax row, Herve Falciani, sent an email to HMRC as early as 2008.

The head of HMRC, Lin Homer, under grilling from MPs, this week said she had “no knowledge” of such an email in 2008.

The tax agency has come under fire because only one of the hundreds of HSBC clients in Switzerland which it examined has been prosecuted.

But it said it recovered £135 million through investigations and deals with the holders of offshore accounts with HSBC.

Further revelations from the leaked HSBC files showed that the Swiss private bank dealt with alleged drug-runners, arms dealers and bankers accused of looting funds from former Soviet states.

The Bank of England, through the Prudential Regulation Authority, has been in charge of the oversight of banks since 2013 when the previous Financial Services Authority was split in two.

Its overall brief is to ensure financial stability across the banking system but it has powers to investigate and intervene when it believes an individual bank could be taking too much risk or does not have the checks in place to prevent that.

HSBC’s former chairman Lord Green has been called before MP Margaret Hodge’s Public Affairs Committee while the Treasury Select Committee, which is headed by Andrew Tyrie, intends to grill other senior executives at the bank.