HSBC extends redress payments

HSBC extends redress payments

HSBC has extended its redress scheme for customers who were charged "unreasonable" debt collection fees by companies now under its umbrella.

This comes after the bank's recent review identified a further 18,500 customers who may have been levied the charge.

The scheme has now been extended to HFC Bank and John Lewis Financial Services, which are now both part of HSBC UK Bank.

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Between 2003 and 2009 customers of HFC and JLFS who fell into arrears were referred to the companies’ nominated solicitors and charged 16.4 per cent of the balance as a "debt collection charge".

The flat rate charge was branded unreasonable by the Office of Fair Trading in 2010, as it did not reflect the actual cost of collecting the debt.

In November 2010 the OFT imposed a formal requirement on HFC to stop adding a collection charge. JLFS was not within the scope of the review but was carrying out similar practices to HFC, the Financial Conduct Authority found.

HFC and JLFS both stopped adding a debt collection charge in November 2009 and in 2010 reversed the charge from all live accounts.

HSBC's voluntary redress scheme was launched in February 2017 to compensate customers who have paid more than the actual cost of collecting their debt.

This followed an investigation by the FCA, which had taken over regulation of consumer credit in April 2014.

In April this year the FCA announced that HSBC was expanding its review to identify further customers who may have paid unreasonable debt collection charges.

HSBC confirmed that in May 2019 approximately 18,500 customers who had not previously been contacted were written to as part of this process.

Customers will be compensated if they are deemed to have paid unreasonable debt collection charges and the FCA is urging anyone who received a letter from HSBC to bet in touch with the bank.

It is believed a few hundred of the newly identified customers relate to the John Lewis credit card.

A spokesman for John Lewis Finance said: "We are disappointed that this has happened to a very small number of John Lewis Financial Services Limited customers and we are assured by HSBC that this historic issue has been resolved."