HSBC to pay back £4million to thousands of customers who paid “unreasonable debt collection” charges
Almost 7,000 customers are due back a refund on the charges that were made between 2003 and 2009
THOUSANDS of customers will receive a refund from HSBC for "unreasonable debt collection charges" made on unsecured loans and credit cards.
The charges were imposed on customers of HFC Bank and John Lewis Financial Services Limited and relate back to payments made between 2003 and 2009, the Financial Conduct Authority said.
Both the firms are now part of HSBC Bank. Customers had signed up for "point of sale finance", meaning they may have taken out store cards or loans on items in shops.
At the time they were referred to a solicitor who added 16.4 per cent onto outstanding balances.
In 2010 the Office of Fair Trading ruled that these charges were unreasonable and ordered the firms to stop charging them.
Now HSBC has volunteered to repay 6,7000 customers who previously paid the debt collection charge.
Customers will be paid back a slice of a £4million pot - meaning the average payout will be around £600 but it will vary depending on how much they paid at the time.
It has also committed to paying 8 per cent interest per year on top of refunds. Some customers who were refunded the charges but never received the cash will also get their money back.
The FCA said: "Those customers will receive redress where they paid more than the actual and necessary cost of collecting their debt.
"HSBC has agreed their methodology for calculating the actual and necessary cost with the FCA."
A spokesperson from 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.”
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