HSBC Said to Face ‘Disruptive’ Review of Credit Risk Reporting

U.K. regulators have told HSBC Holdings Plc to review how it reports credit risk, starting a process that industry experts say can sometimes lead to large-scale and costly internal reforms.

HSBC has been instructed to commission a section 166 review, which typically involves bringing in a consultant to analyze the accuracy of regulatory reporting, according to a person familiar with the matter, who asked not to be named discussing private matters. The review typically leads to a report recommending changes inside the lender.

A spokeswoman for HSBC declined to comment. The Bank of England’s Prudential Regulation Authority, which supervises ...