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HSBC to pay £4million in redress
HSBC has agreed to set up a compensation scheme for customers who may have paid unreasonable debt collection charges
The Financial Conduct Authority (FCA) has revealed that HFC Bank Ltd and John Lewis Financial Services Limited (both part of HSBC Bank Plc) charged customers who fell into arrears between 2003 and 2009 a 16.4% debt collection charge via the firms solicitors.
The FCA said in a release that “the flat rate charge was identified as unreasonable by the Office of Fair Trading in 2010, as it did not reflect the actual and necessary costs of collecting the debt.”
Both companies stopped adding the charge in November 2009.
Since December 2015, the FCA has conducted a thorough review and has established that approximately 6,700 customer accounts, the vast majority of which were HFC customers, are potentially entitled to compensation.
In is estimated that approximately £4 million will be paid by HSBC to affected customers. For each group of customers which are due redress, the firm will also pay 8% interest per annum.
HSBC has set up the repayment scheme voluntarily and has agreed their methodology with the FCA. There is no need for customers to take any action as HSBC will contact all affected customers in due course.