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Martin Lewis warns HSBC, First Direct and M&S customers after man nearly chucked away unexpected cheque thinking it was a scam

Martin Lewis has issued an important warning to customers and former customers of HSBC, First Direct, M&S Bank and John Lewis Finance that they may get a letter out of the blue with a cheque in it. It comes as one man nearly binned an envelope containing £50 from First Direct after thinking it was a scam. 

Speaking on ITV's The Martin Lewis Money Show, Martin, who is also the founder of, explained that these banks are providing automatic compensation after customers in arrears received a substandard level of service.

His warning came after a viewer called Alan got in touch when he received a £50 cheque out of the blue and wondered if it was a scam. Since the programme aired, Martin says the show has been swamped with others who received the cheque, some of whom also questioned its legitimacy. MoneySavingExpert has also seen tweets from confused customers after it first revealed what had happened in December 2020.

Commenting on Alan's letter, Martin said: "I recognise this letter, it's not a scam – cash it. And this is really important for lots of people – if you bank with HSBC, First Direct, M&S Bank and John Lewis Finance, between 2010 and 2019, and you were in arrears at some point on one of their debt products – mortgage, credit cards, loans and others – well, it admits its customer service was wrong, and so it's automatically sending out compensation." 

Am I due a cheque from the banks?

HSBC Group, which all four brands come under, says in an internal review it uncovered instances where customers in arrears hadn't received the quality of service that it expected between 2010 and 2019, and it's decided to put this right. HSBC wouldn't confirm exactly what it did wrong or who is affected but said examples of bad practice included poorly worded letters that didn't engage customers who might have been struggling. 

Regulator the Financial Conduct Authority generally defines credit arrears as any shortfall in one or more payments due, while for home mortgages it's a shortfall equivalent to two or more regular payments. HSBC has confirmed this issue affects all types of consumer banking products where you could fall behind with repayments, from mortgages to personal loans to credit cards. 

The banking group wouldn't tell us how many customers are in line for a payout but as it has 14 million active UK customers across the four brands, even if just 1% were affected that would amount to 140,000 people – plus, there are those who have already closed accounts on top. Read our Debt Help guide if you're struggling. 

Do I need to do anything to get a payment? 

HSBC says anyone who's due compensation will be contacted directly, so you don't need to do anything. Affected borrowers will be sent goodwill cheques worth between £25 and £100 depending on the level of poor service. These began to be sent in late October with the last letters due to arrive by the end of March 2021. 

This is likely to mean a letter, including a cheque, turns up out of the blue. If you receive a letter and you're unsure if it's genuine, you can contact your lender to confirm it's real. Also see our Stop Scams guide for tips on how to stay one step ahead of fraudsters. 

What if I've moved home or switched bank?

HSBC says it's taken measures to ensure it has your up-to-date contact details – even where you've since left the bank or moved home – although Martin has urged customers to contact their bank if they feel they're due compensation and haven't heard from HSBC by the end of March. 

Martin said: "People are going to get these letters up until March 2021. If you think you're due one and you don't get one after that I'd get in touch. And if you've moved house, I'd tell it about your address. But watch out for these – do not bin them. This is cash in the bank – put your cheque in."

What does HSBC say?

An HSBC UK spokesperson said: "We always strive to do the right thing by our customers. Regrettably, some historic cases where customers were in arrears at times fell short of this commitment. We are taking action to put that right and remediate customers who may have been impacted. Customers do not need to do anything."

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