Martin Lewis has explained why some HSBC and First Direct customers are receiving refunds.
The Money Saving Expert has urged customers of these banks not to throw any letters away thinking it’s a scam.
Some customers of banking giants HSBC and First Direct have reported receiving payments of up to £7,000.
Many of HSBC customers are now being sent refunds after as the bank seeks to rectify a payments error it made over a decade ago.
According to the MEN, customers who banked with HSBC, First Direct, Marks & Spencer bank or John Lewis Finance between 2010 and 2019 have been receiving £50 compensation payouts since mid-2020 in the post.
These have all now been made however HSBC – which owns all four lenders – is now issuing further refunds for fees and interest changes incurred over the nine-month period.
Speaking on the Martin Lewis Money Show, consumer expert Martin Lewis said: “Towards end of the last series, I told customers of John Lewis Finance, HSBC, M&S bank and First Direct customers to expect a cheque in post if they were in arrears 2010 and 2019.”
One viewer then said he had been sent a £390 First Direct cheque in the post, asking the consumer expert if it was a scam.
“It’s unlikely,” Martin said.
“People were wrongly charged fees and interest and are now being refunded in addition to the refunds last year.
“It’s a smaller group of people than last time that fit these refunds,” he said.
“But if you receive a letter in the post, don’t throw it away thinking it is spam.”
If in doubt, customers can contact their bank to verify the refunds.
“Two people this week told me they received cheques worth £7,000 in the post this week,” he added.
“You were overcharged so if you receive a cheque, cash it in as it’s your money,” Lewis added.
What happened exactly?
Borrowers who fell behind on repayments between 2010 and 2019 were sent refunds of up to £50 until March this year, after the bank admitted it delivered a substandard level of service over a 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.
Now, it’s refunding customers who were charged extra fees and interest too – and some of these refunds and compensation payouts are much higher.
What payment types are affected?
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 were sent goodwill cheques in the post worth £50 depending on the level of service received. If you qualified for this, you will have received a cheque by March 2021.
The latest refunds are linked to fees and HSBC – the umbrella company – is now processing these refunds.
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.
However anyone concerned can contact the lender online – this may be because you had one of the qualifying products over the nine year period and have since changed address or you name.
A HSBC UK spokesperson previously 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.”
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