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HSBC to pay £218m compensation to loan customers

05/08/2014

HSBC are to repay £218m of interest charges to some of their UK loan customers who received insufficient paperwork.

Under the Consumer Credit Act, lenders are required to use a customers annual statement to provide information about the option of making overpayments on a loan.

However, the bank has admitted that they only provided the information when customers first took out the loan and the information had been left out of annual statements.

It is for this reason that they have set aside £218m to pay back customers who were not provided with the correct information.

The mistake was realised during the banks internal review, and despite admitting to making the error, a spokesman maintained that “no financial detriment” had been suffered by their customers.

It is also believed that the Financial Conduct Authority (FCA), who regulate the banking industry are aware of the situation.

Customers have now been assured that whilst it has not been announced who will be eligible to receive compensation, plans are set to be outlined in the near future.

Compensation



The bank are set for a particularly expensive year in terms of compensation pay outs as they had already set aside £139m for similar repayments for the first half of the year.

This compensation includes £115m for payment protection insurance (PPI) mis-selling and £24m for the mis-selling of interest rate hedging products.

Their overall compensation bill for PPI mis-selling is now £2.1bn, whilst their interest rate hedging bill stands at around £536m.

HSBC’s finances have suffered a dip recently as their pre-tax profits fell by 12% in the first six months of 2014, taking their profits to £12.34bn in comparison to £14.071bn for the same time period last year.



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