Thousands of HSBC customers could receive compensation payouts this month, as the bank seeks to rectify a payments error made more than a decade ago.
Customers who banked with HSBC, First Direct, Marks & Spencer bank or John Lewis Finance between 2010 and 2019 and fell behind on their payments could be due compensation, consumer expert Martin Lewis warned on Thursday’s ITV Money Show.
“If you banked with HSBC, First Direct, Marks & Spencer bank or John Lewis Finance between 2010 and 2019 and you were in mortgage or current account arrears at some point, you may be due a payout,” Martin explained.
“HSBC, which runs all three accounts, has admitted its customer service was in the wrong, so it’s automatically issuing compensation.
“These cheques are being sent out until March. If you receive one, do not bin it. They’re worth £50 cash in the bank.”
What happened exactly?
Borrowers who fell behind on repayments between 2010 and 2019 are due up to £50 in compensation after the bank admitted it delivered a substandard level of service over the nine year period.
HSBC Group, which all four brands come under, said an internal review uncovered instances where customers in arrears hadn’t received the quality of service expected. Last year, it decided to put this right.
It’s not a scam, despite some confusion caused by letters arriving out of the blue.
HSBC has not confirmed exactly what it did wrong, but said examples of bad practice included poorly worded letters that didn’t engage customers who might have been struggling to make repayments.
The Financial Conduct Authority (FCA) generally defines credit arrears as any shortfall in one or more payment due, while for home mortgages it’s a shortfall equivalent to two or more regular payments.
HSBC has confirmed this issue impacts all types of consumer banking product where you could fall behind with repayments; from mortgages to personal loans to credit cards.
The banking group has 14million active UK customers across the four brands, even if just 1% were affected that would amount to 140,000 people – so if you receive a cheque, cash it in.
Do I need to actively claim it?
Affected borrowers will be sent goodwill cheques in the post worth £50 depending on the level of service received. These will be issued until the end of March 2021.
HSBC previously said anyone due compensation would be contacted directly, so you don’t need to do anything – even if you’re no longer a customer.
A 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.