The Isle of Man branch of HSBC is subject to a different set of rules than the UK.

The news emerged after HSBC was fined £57.4 million by the Bank of England’s Prudential Regulatory Authority (PRA).

The fine was issued for HSBC’s failure to protect customer deposits in the event of a banking collapse.

It is the second highest fine issued by the UK regulatory body.

The highest was the penalty given to Credit Suisse which was fined £87 million in July 2023.

HSBC’s fine was imposed on two UK subsidiaries of HSBC Holdings which are deemed to have the ‘capacity to cause significant disruption to the UK financial system if they were to fail’.

A spokesperson for the Isle of Man Financial Services Authority (FSA) said: ‘HSBC in the Isle of Man operates through a branch of HSBC Bank plc.

The Isle of Man branch is licensed and regulated by the Isle of Man Financial Services Authority (FSA).

‘Deposits held in the Isle of Man branch are not eligible for (UK) Financial Services Compensation Scheme protection.

'Instead they are eligible for protection under the Isle of Man Depositors’ Compensation Scheme (DCS).

‘The Depositor Protection Rules referenced in the UK news story re: the £57.4m fine imposed by the Bank of England are therefore not applicable to the Isle of Man branch.’

‘The FSA recently issued a consultation paper on aspects of the Isle of Man Depositor Compensation Scheme.

‘This included proposed requirements for banks in the Isle of Man to provide timely, accurate and comprehensive financial information in the form of a “Single Customer View” file to facilitate collation of data about depositors’ account balances.’

The consultation closed on January 21.