Nicholas Wilson has spent years pursuing HSBC over the way it treated some people who fell behind with payments, and when he claimed the bank might owe customers more than £200m, it arguably sounded pretty fanciful.
For more than a decade he was ignored and dismissed but HSBC eventually set up a £4m compensation scheme to remedy “a historical issue”.
Four years later, the 64-year-old whistleblower says he feels vindicated after it emerged the bank had set aside £223m to pay compensation to customers after an internal review into how it treated some people who were in arrears.
This redress programme, which kicked off with no fanfare in October, has resulted in large numbers of people receiving cheques out of the blue, often for relatively small amounts such as £25 or £50.
However, some HSBC customers have reported receiving a lot more than that: Martin Lewis’s MoneySavingExpert website has heard of refunds ranging from £245 to more than £7,000.
HSBC says its compensation scheme, which has never been publicly announced and is almost at an end, has nothing to do with the case Wilson has been doggedly pursuing since 2003. That involved the bank eventually agreeing to pay compensation to credit card customers who were hit with excessive charges more than a decade ago.
But Wilson insists the current redress scheme is “a direct result of my campaign”, and says there are many unanswered questions.
When pressed, HSBC disclosed that the £223m did include “a nominal amount” relating to the costs associated with rectifying the problems that Wilson flagged up almost 20 years ago – suggesting the bank may still be making payments to these people.
Wilson is right about the unanswered questions – until recently, HSBC has said very little about any of this, forcing media outlets such as the Guardian and BBC Radio 4’s Money Box programme to scrabble around for what information they can get.
So here is what we know: according to HSBC, there are two separate issues, and both involve it paying compensation to customers. There are the problems highlighted by Wilson, which relate to 2003-09, and then there is the latest scheme, which spans 2010-19.
The 2003-09 problems
This involves people who held credit cards with HFC Bank and John Lewis Financial Services, both now part of HSBC.
Between 2003 and 2009, some customers of these two companies who fell into arrears had 16.4% of the balance added to their account as a “debt collection charge”. Wilson, who lives in Hastings, East Sussex, says he told HFC in 2003 that what it was doing was illegal. In 2010 this flat-rate charge was judged to be unreasonable by the Office of Fair Trading.
However, we know about all this only because the Financial Conduct Authority (FCA) got involved eventually, and in 2017 the regulator announced that HSBC had agreed to set up a £4m compensation scheme for people who had lost out as a result of paying the excessive charges. It said the money would be shared between about 6,700 customers.
But the FCA later became convinced that more people had lost out, so it asked HSBC to reconsider. As a result, in July 2019 the FCA said the bank was extending the compensation scheme and had written to a further 18,500 people. At the time, Wilson told the Guardian he believed the total figure for the excessive charges was more than £200m, and while “25,000 people might get some money back, that is far, far short of the true figure”.
Things have been quiet since then, suggesting the problem had been sorted out. But when questioned by Guardian Money, HSBC indicated the compensation scheme was still active, although a spokesperson said it was coming to an end. The bank said the final sum “has not materially shifted” from the original £4m.
The 2010-19 problems
This involves customers of HSBC and its brands, such as First Direct and M&S Bank, who were in arrears on any kind of financial product – loan, overdraft, credit card, etc – between 2010 and 2019 and “did not receive a good customer experience”.
The bank says this includes letters sent to customers that were unclear or poorly worded or where people could have benefited from more support.
After an internal review, HSBC started sending cheques to affected customers last October but this process is coming to an end.
It is understood the majority of cheques were for between £25 and £100, although some people – a small minority, says the bank – have been getting larger cheques, apparently to refund interest and charges that they should not have had to pay. MoneySavingExpert revealed how one woman received a £25 cheque, then another for £7,210.
But because nothing was announced publicly at the time, and the accompanying letters were light on detail, some people receiving these cheques were left mystified or thinking it was a scam. In January this year, Guardian Money’s Consumer Champions column featured an article headlined “We’re baffled by the surprise £50 we received from HSBC”, and it now seems likely that this payment was part of the redress scheme.
HSBC filled in a few of the blanks when it responded to Guardian Money but it is still far from clear what went wrong, what prompted the bank to launch this exercise (was it leaned on?) and how many people have been affected. But HSBC clearly felt it had to disclose the £223m headline figure for dealing with this mess in its most recent accounts, which it has done.
HSBC said: “We always strive to do the right thing by our customers. Regrettably, we have identified some historic cases of customers in arrears where we fell short of this commitment. Where they did not receive a good customer experience, we have taken action and offered redress to put that right.”
If it turns out that Wilson’s long battle with HSBC did play a role in prompting the £223m payout, that would be quite the David and Goliath victory for a lone whistleblower on benefits who is being supported financially by donations from Twitter followers.
