You are here: Home - Saving & Banking - News -

HSBC to provide £4m redress for ‘unreasonable’ debt collection charges

0
Written by: Hannah Uttley
20/01/2017
HSBC has voluntarily agreed to pay out around £4m in redress to thousands of customers who were affected by an “unreasonable” debt collection scheme between 2003 and 2009.

Some 6,700 customer accounts which had fallen into arrears are said to have paid a 16.4% debt collection charge, which was charged by solicitors instructed by HFC Bank and John Lewis Financial Services (JLFS) – now part of HSBC Bank.

In 2010, the Office of Fair Trading (OFT) deemed the charge unreasonable, as it did not reflect the actual and necessary costs of collecting the debt. In November of that year, the OFT placed a formal requirement on HFC to stop adding the charge until it had varied or introduced new terms in its agreements with customers. JLFS did not come under the scope of the OFT’s review despite carrying out similar practices.

All charges were reversed from live accounts in 2010 after HFC and JLFS stopped adding the fee.

Following a complaint to the Complaints Commissioner in December 2015, the Financial Conduct Authority (FCA) conducted a review and established that around 6,700 accounts were potentially entitled to redress. Customers will now receive redress where they paid more than the actual and necessary cost of collecting their debt.

A small number of customers will also receive a rebate after the reversal of the debt collection charge in 2010 meant their account was placed in credit which was subsequently not returned to them.

A further 350 customer accounts will be repaid overcharged interest which was miscalculated by HFC.

For each group of customers which are due redress, the firm will also pay 8% interest per annum.

The FCA confirms there is no need for customers to take any action on this issue as HSBC will proactively contact all affected customers with offers of redress. HSBC said it will also implement a ‘direct customer contact line’ which will be available from late February.

An HSBC spokesperson, said: “This is a historical issue, dating back to the period between 2003 and 2009. We have revisited the debt collection charge and as a result a small number of HFC and John Lewis Financial Services Limited customers may be due a refund. We will be directly contacting these customers shortly.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • @YourMoneyUK All you need to know about the latest Current Account Switching winners and losers - hats off to Starl… https://t.co/fAyHhplpoP
  • RT @WeareJust_PR: Many people struggling to make ends meet may not realise they are entitled to financial help or find the system too confu…
  • RT @WeareJust_PR: Many people struggling to make ends meet may not realise they are entitled to financial help or find the system too confu…

Read previous post:
How to take advantage of the January sales without breaking the bank

January is often a difficult time following the Christmas splurge. But with the January sales in full swing, even those...

Close