Both payment methods relate to customers of HSBC, First Direct, M&S Bank and John Lewis Finance who were in arrears with any financial product, including mortgages, overdrafts, credit cards and loans, between 2010 and May 2019. The Financial Regulator generally defines arrears as a shortfall in one or more payments due, while for home mortgages it is a shortfall equal to two or more regular payments.
HSBC Banking Group, which includes all four lenders, says the payments are the result of an internal review that found they had communicated poorly with some customers and that if they hadn’t, some would have paid interest and fees should. The bottom line is that you may be eligible for both, neither, or one of the programs. How they work:
- The FIRST legal protection program was used to compensate for poor service and ran from October 20th to March 21st. As MoneySavingExpert.com announced in December 2020, some customers have been issued goodwill checks for between £ 25 and £ 100, depending on the level of poor service. These were sent at the end of October 2020, the last arrived at the end of March 2021.
HSBC will not tell us exactly which customers were due for payment under this initial legal protection scheme, or it will not tell us exactly what was done wrong. However, it does include examples of bad practices that customers are compensated for, including poorly worded letters that ignore those who might have fought.
- The SECOND new legal protection system is for the reimbursement of interest and fees and has not yet been completed. Some customers who incurred interest or other fees while in arrears that they shouldn’t have paid will now be reimbursed with an additional 8% interest. Refunds will be sent as checks or, in some cases, when HSBC has your details, paid directly to your bank account. According to HSBC, most of the payments have now been made, but some will continue to be paid in the coming months.
HSBC won’t tell us exactly who is affected or how much average payments are worth, but we spoke to a MoneySaver (see below) who got almost £ 350 back.
While HSBC gives us no indication of how many people are receiving payments under the two systems, the four brands currently have 14 million active customers in the UK – and there are those who have already closed accounts. If you’re struggling with arrears and need help, check out our guide to debt problems.