(Recasts, adds MP and analyst comment)
By Huw Jones and Tom Bergin
LONDON, Feb 16 (Reuters) - Britain's financial watchdog saidit was investigating HSBC following reports it helped clientsevade taxes but said it was focusing on the bank's currentbehaviour rather than alleged past abuses.
In its first statement on the matter, the Financial ConductAuthority (FCA) said it wanted to verify that the "failings" thebank admitted to were in the past.
"The FCA is working closely with the firm and other agencieswhich have an interest in this matter to ensure that anyquestions this may raise in relation to any current practicesand culture of HSBC are addressed," it said.
Gary Greenwood, analyst at Shore Capital Stockbrokers, saidthe focus on current behaviour was positive for HSBC if, as thebank said, it had cleaned up the problems at its Swiss privatebank.
But Nick Smith, who sits on parliament's Public AccountsCommittee which last week criticised the UK tax authority forfailing to take action against HSBC, said he was disappointedthe FCA had settled for a narrow focus.
Smith noted the FCA's U.S. counterpart, the Securities andExchange Commission (SEC), had taken legal action against Swissbanks for assisting clients to evade U.S. taxes.
"We need a belt and braces effort here. The SEC have shownthe way, the FCA need to grip this properly," he told Reuters ina telephone interview.
Last year, the SEC forced Swiss bank Credit Suisse to admitwrongdoing and pay $196 million in relation to tax evasioninvolving U.S. clients.
An FCA spokesman said the regulator faced difficulty inpursuing action against HSBC because the behaviour publicised sofar involved its Swiss unit, HSBC Private Banking (Suisse) SA,which the spokesman said was beyond the FCA's jurisdiction.
However, lawyers have told Reuters that if, as alleged innews reports, HSBC Private Banking (Suisse) SA sent staff toBritain to advise clients on how to dodge UK taxes, the Swissunit could come under the FCA's jurisdiction.
The SEC case hinged on the fact Credit Suisse bankerstravelled to the United States to push products and advice theywere not licensed to offer.
The FCA spokesman declined to say if the agency wouldinvestigate the allegations that staff from HSBC Private Banking(Suisse) operated in Britain.
HSBC said last week it was cooperating with relevantauthorities but declined further comment on Monday.
Jon Cunliffe, deputy governor at the Bank of England, HSBC'sother main regulator in Britain, said on Friday the BoE may lookinto the tax allegations.
Britain's Serious Fraud Office said on Thursday it was opento discussing the allegations with British tax authority HMRC.
Parliament's Treasury Select Committee are also taking aninterest and will grill HSBC Chairman Douglas Flint and CEOStuart Gulliver on Feb. 25. (Additional reporting by Steve Slater; Editing by JaneMerriman/Ruth Pitchford)
HSBC Holdings (HSBA)