HSBC extends scheme to compensate for unreasonable debt collection charges

Thousands of consumers who may have paid unreasonable debt collection charges have been contacted by HSBC, which has voluntarily agreed to extend a redress scheme, the City regulator has said.

Customers may have lost out by paying charges imposed by HFC Bank (HFC) and John Lewis Financial Services Limited (JLFS) – which are both now part of HSBC UK Bank.

HSBC confirmed that in May 2019 around 18,500 customers who had not previously been contacted were written to, the Financial Conduct Authority (FCA) said.

The regulator said that between 2003 and 2009, customers of HFC and JLFS who fell into arrears were referred to solicitors.

On referral, HFC and JLFS levied a charge to the account representing 16.4% of the balance as a “debt collection charge”.

But the flat rate charge was identified as unreasonable by FCA predecessor body the Office of Fair Trading (OFT) in 2010, as it did not reflect the costs of collecting the debt.

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

In 2017, HSBC started a voluntary redress exercise to compensate customers where they had paid more than the actual and necessary cost of collecting their debt.

Earlier this year, the FCA announced that HSBC was expanding its review to identify and compensate further customers who either have or may have paid unreasonable debt collection charges.

Customers will be compensated where the records indicate they paid unreasonable debt collection charges.

Where the records show that customers paid their outstanding debt but are unclear about whether debt collection charges were applied and paid, customers will be written to and invited to give their recollections.

Customers will be compensated where their recollections indicate they have paid unreasonable debt collection charges, the FCA said.

It is encouraging anyone who received a letter to get in touch with HSBC at HSBC UK Bank Plc, Business Review Centre, Redcliff Quay, 120 Redcliff Street, Bristol, BS1 6HU.

In addition, any customer who thinks they may have been impacted by these issues should call HSBC directly on 03455 857 564.