HSBC to hand back interest after loan errors

Banking and Borrowing

Updated on 05 August 2014 | 1 Comment

£218 million of interest payments to be handed back.

HSBC has confirmed it is to hand back £218 million in interest payments to borrowers, after it omitted details outlining the option to make overpayments on its loans.

This lack of information breaches the Consumer Credit Act, which is why the interest payments will be handed back.

Dodgy annual statements

The information was reportedly included in the initial statement, but missing in subsequent annual statements. The error goes back a couple of years but has now been corrected. No one who has taken out a loan within the past 12 months is affected.

The omission was uncovered in HSBC’s half-yearly report, admitting that it was an oversight on the bank's part. Regulators are also aware of this issue.

HSBC emphasised that there is “no financial detriment” to customers as a result of the error. Borrowers were still allowed to make overpayments, despite it not appearing on their annual statement. 

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Costly mistakes

£218 million has been reserved for “provision arising from a review of compliance with the Consumer Credit Act in the UK”.

According to the same half-yearly report, HSBC has also put aside £139 million for “UK customer redress programmes” including £115 million compensation for mis-selling PPI.

Customers affected by the annual statement error are being contacted to offer interest payments.

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