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HSBC to compensate thousands more customers over unfair debt collection charges

HSBC to compensate thousands more customers over unfair debt collection charges

HSBC has agreed to extend a scheme to compensate customers who may have paid an unreasonable debt collection charge imposed by HFC Bank and John Lewis Financial Services between 2003 and 2009.

Between these dates, customers who fell into arrears were referred to the two firms' nominated solicitors and then a fee of 16.4% of the balance was added to the account as a 'debt collection charge'. The Office of Fair Trading identified the charge as unreasonable in 2010.

Both firms are now part of HSBC, which in February 2017 began a voluntary redress scheme to compensate customers who had paid more than the "actual and necessary" cost of collecting their debt.

Initially just under 7,000 customers were contacted about redress, but in May this year HSBC confirmed that approximately 18,500 customers, who had not previously been contacted, were written to.

See our Debt Help guides for more information. 

What do I need to do to claim cash?

If HSBC believes you're affected, you should now have received a letter from it.

Where records show you paid unreasonable debt collection charges, you'll be refunded (you'll need to reply to the letter with your details).

But where records show you paid your outstanding debt but don't say if you paid a debt collection charge, you'll be asked for evidence and further information.

If possible, have bank statements or proof of payment ready. This will be cross-checked with information HSBC holds.

The Financial Conduct Authority says it encourages anyone who has 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.

If you think you've been affected but haven't received a letter, call HSBC on 03455 857564.

How much will customers get?

Customers owed redress will be paid the fee back, plus 8% interest a year on that money.

An HSBC spokesperson said: "Doing the right thing by HFC customers who paid unreasonable debt collection charges during the period 2003-2009 is an important undertaking for us.

"Earlier this year we expanded our review to identify further HFC customers who may be eligible for reimbursement through a broader and more complex investigation of third-party records."

A spokesperson 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."