You are here: Home - News -

HSBC to provide £4m redress for ‘unreasonable’ debt collection charges

  • 20/01/2017
  • 0
HSBC to provide £4m redress for ‘unreasonable’ debt collection charges
HSBC has voluntarily agreed to pay out around £4m in redress to customers who were affected by an “unreasonable” debt collection scheme between 2003 and 2009 imposed by firms owned by the bank.

Some 6,700 customer accounts are said to have paid a 16.4% debt collection charge, which was charged by solicitors instructed by HFC Bank and John Lewis Financial Services to customers who had fallen into arrears.

In 2010, the Office of Fair Trading deemed the charge unreasonable, as it did not reflect the actual and necessary costs of collecting the debt. In November of that year, the OFT placed a formal requirement on HFC to stop adding the charge until it had varied or introduced new terms in its agreements with customers. JLFS did not come under the scope of the OFT’s review despite carrying out similar practices.

All charges were reversed from live accounts in 2010 after HFC and JLFS stopped adding the fee.

Following a complaint to the Complaints Commissioner in December 2015, the Financial Conduct Authority (FCA) conducted a review and established that around 6,700 accounts were potentially entitled to redress. Customers will now receive redress where they paid more than the actual and necessary cost of collecting their debt.

A small number of customers will also receive a rebate after the reversal of the debt collection charge in 2010 meant their account was placed in credit which was not returned to the customer.

A further 350 customer accounts will be repaid overcharged interest which was miscalculated by HFC.

For each group of customers which are due redress, the firm will also pay 8% interest per annum.

A spokesperson for HSBC said: “This is a historical issue, dating back to the period between 2003 and 2009. We have revisited the debt collection charge and as a result a small number of HFC and John Lewis Financial Services Limited customers may be due a refund. We will be directly contacting these customers shortly.”

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • RT @robjupp: Great day yesterday for donations to @MortSleepOut. With Gift Aid, we are now close to £17,000. It would be great to get to £2…

Read previous post:
Leeds BS video panel pic
Interest-only: Which borrowers can it work for? Video part three

Welcome to part three of our interest-only panel debate, in association with Leeds Building Society.