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Compensation is on the way for some HSBC customers, as it’s revealed they were overcharged for falling behind with their repayments.
HSBC has announced that it will refund £4 million to customers who were overcharged when they fell behind with their repayments.
If you fail to repay your borrowing as agreed, you will incur charges and late payment fees. This is to cover the financial firm for the cost of recovering the debt. However in this case, it has been decided that HSBC overcharged their customers, because the amount they charged did not reflect how much it actually cost them to recover the debt.
The mistake affected customers of HFC and John Lewis, two firms owned by HSBC. Altogether, it’s been calculated that 6,700 people were affected and most of those people were customers of HFC. HSBC has volunteered to redress their customers for the mistake and, if you average the compensation out, each customer will receive around £600.
This is a historic case, as the overcharging occurred between the years of 2003 and 2010. During this time, when certain customers fell behind with their repayments, they were referred to the firm’s solicitors. The solicitors then added a charge of 16.4% of the balance to the account, increasing the overall amount that these customers owed.
The Office of Fair Trade actually made the decision that the charges were unfair back in 2010. Further to this investigation, The Financial Conduct Authority (FCA) has looked into the situation in more detail and found out how many people were affected and how much they’re owed.
The charges themselves were reversed in 2010 and for some customers this meant that their account was placed in credit. These customers will also receive a refund of that credit amount. The FCA also found that there were a small number of customers who were charged the wrong amount of interest on their loans, and HBSC has also committed to repaying these customers as well.
What should I do?
If you’ve been affected by this, you don’t need to do anything about it yourself. You’ll be contacted by HSBC directly about your refund.
If you’re falling behind with your repayments and worried about getting late payment fees, it might be time to get debt advice. You should keep in touch with your creditors, so they know that you do intend to make your payments. Your creditors might agree to lower your payments for a while, or to freeze interest and charges if you’re struggling.
Speak to a trained debt advisor if your debts have started to get out of control. They will be able to advise you about the best course of action and, if you need to start a debt solution, they can recommend the best one for you. Scroll down to find out how you can contact our advisors today
by Christine WalshBack to blog home