HSBC pays back £16 million in unfair charges
by Gill Montia
Story link: HSBC pays back £16 million in unfair charges
HSBC has put itself in the spotlight by becoming the first UK bank to reveal the cost of refunding customers charged with unreasonable fees for unauthorised overdrafts.
In the first half of 2007, the bank made refunds totalling £116 million. The figure is above analysts’ estimates and according to HSBC, demonstrates the bank’s commitment to treating its customers in a fair and transparent manner.
Earlier this year, Credit Suisse, the investment bank, put a figure of £200 million on such refunds across the UK banking sector, for the first-half of 2007.
However, the HSBC figure indicates that this estimate is well below what can be expected.
Other leading banks and lenders have been reluctant to publish details of the cost of refunds and have only gone as far as acknowledging that unreasonable charges are a major issue.
To date, tens of thousands of customers have claimed back the charges, which amount to penalty fees.
Some have been successful in recovering six years’ worth of charges and pressure from consumer groups, combined with high-profile media coverage of the matter, has led the Office of Fair Trading to bring a test case in the High Court.
It is difficult to ascertain how the repayment of unreasonable charges will impact on profits in the banking industry, but in its statement HSBC reassures shareholders by pointing out that its UK personal financial services business represents less than 7% of worldwide profits.
