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HSBC student account applicants wrongly offered standard bank accounts following 'processing error'

HSBC student account applicants wrongly offered standard bank accounts following 'processing error'

Some students heading off to university over the next few months have been wrongly offered HSBC's standard current account instead of the student bank account they'd applied for. But HSBC says it will switch those affected to its student account. Here's what's happened and what it means for you. 

HSBC has admitted that "a number of individuals" who applied for its student account at some point between June (it couldn't give an explicit date) and on or before 16 August were wrongly offered and then took out its standard current account. It blames the problem on an internal "processing error", although it adds that this was fixed for new student account applicants from 16 August onwards. 

The bank says it is now in the process of contacting affected customers to switch their HSBC current account to its student version and to update the credit reports of those impacted (see below for more).  

HSBC's student account comes with an up to £3,000 interest-free overdraft, as well as perks for those in England, Scotland and Wales (the incentives aren't available in Northern Ireland), which include a free £80 in cash, plus the choice of either a £20 Uber Eats voucher or ASOS Premier membership for a year, which usually costs £9.95.

In comparison, HSBC's standard current account only has a £25 interest-free overdraft and doesn't come with any switching incentives at present. See our Student Bank Accounts guide for the top overdrafts and freebies if you're planning to go to university. 

'My 18-year-old has been turned down for a student account and offered a current account instead'

Some of the students who were offered a current account by HSBC say they were rejected due to their credit score. HSBC has admitted this may have been said to some customers in error, although it adds that there will be some it feels it has rightfully rejected due to a legitimate history of poor credit - something its terms and conditions allow for. 

HSBC hasn't told us how many people are impacted by the processing error but here's a selection of some of the complaints we've seen on Twitter over the past few weeks: 

What happens next if you were wrongly offered HSBC's standard current account

Here's what will happen if you were offered HSBC's standard current account: 

  • If you set-up HSBC's standard current account, you'll be proactively contacted and migrated to HSBC's student account. If you no longer want HSBC's student account, you can turn down the switch but bear in mind the student account is likely to be better suited to your needs if you're studying. 

    If you don't want to switch to HSBC's student account AND you no longer want HSBC's standard current account, you can reject the switch and close the standard account as normal via HSBC's online chat, telephone banking service or by visiting your local branch. 

  • If you didn't set-up HSBC's standard account when offered, you can reapply for HSBC's student account. But before you do, check whether you can get a better deal for your needs elsewhere. Santander, for example, is the only student account provider to guarantee a £1,500 interest-free overdraft for the first three years, plus you get a free four-year railcard on account opening. In comparison, HSBC's interest-free overdraft limits aren't guaranteed and will instead be based off the personal financial circumstances of the customer. See our Student Bank Accounts guide for more info.

    If you were rejected by HSBC and you've already taken out a new student account elsewhere, you're likely better off sticking with it. That's because you'll have been credit checked to take out this second account already, and if you also receive a maintenance loan into that account, you'll need to notify your student finance provider about a change of account.

Credit scores 'won't be affected' - but you can complain about any inconvenience caused

HSBC told us the credit scores of those who applied for its student account and were wrongly offered its standard current account "won't be affected" by the error.

If you're impacted, HSBC will remove the standard bank account application from your credit report if you switch to its student account, and it will remove the credit search it carried out on the student account application if you chose, or later choose, not to open HSBC's student account. If you reapply for HSBC's student account and you were impacted by the error initially, this will also only count as one application.  

The bank added that it won't pay compensation as standard to those affected.

Of course, if you're unhappy you can make an official complaint to HSBC asking for a goodwill payment for the inconvenience caused or asking for it to amend your credit report if you feel you've been adversely affected. If HSBC doesn't respond within eight weeks or you're unhappy with the response you do get, you can take your complaint to the free Financial Ombudsman Service

What does HSBC say?

An HSBC UK spokesperson said: “We are aware that a number of individuals who applied for a HSBC student account prior to 16 August have been impacted by a processing error. This meant that some applicants were provided with a standard HSBC bank account instead of a HSBC student account. We apologise for any inconvenience caused and can assure customers that their credit scores won’t be affected by this issue.”

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