The FCA said that HSBC – which also provides financial services for M&S Bank – did not consider customers’ circumstances when it came to missed payments between June 2017 and October 2018.

Affordability assessments were not always made when people were trying to reduce or clear their arrears, meaning some customers ending up facing more money troubles.

These assessments are supposed to make sure a person can afford to take on any extra payments.

The watchdog also said HSBC sometimes “took disproportionate action when people fell behind with payments, which risked people getting into greater financial difficulty”.

It said the bank’s policies and procedures didn’t go far enough to stop failings while there were deficiencies in the training of staff.

“People must be able to trust their lenders to treat them fairly when in financial difficulty,” said Therese Chambers, the FCA’s joint executive director of enforcement and market oversight.

“By failing to do so, HSBC put 1.5 million people at risk of greater financial harm.”

HSBC itself told the FCA about issues with handling customers facing financial difficulty in 2018.

It said it had invested £94m in trying to identify and resolve the problem and made redress payments totalling £185m to more than 1.5 million customers.

The bank could have faced a steeper fine by the FCA of £8.9m. But the watchdog said it took HSBC’s remediation and redress programme into account as well as an agreement to settle the case.