Both sets of payments relate to HSBC, First Direct, M&S Bank and John Lewis Finance customers who between 2010 and May 2019 were in arrears on any kind of financial product, including mortgages, overdrafts, credit cards and loans. The financial regulator generally defines credit arrears as any shortfall in one or more payments due, while for home mortgages it’s a shortfall equivalent to two or more regular payments.
HSBC Banking Group, which all four lenders fall under, says the payments are as a result of an internal review which found that it had communicated poorly with some customers and that some had paid interest and charges when they shouldn’t have. Crucially, you may be eligible for both, neither or either one of the two schemes. Here’s how they work:
- The FIRST redress scheme was for compensation for poor service, and ran from October 2020 to March 2021. As MoneySavingExpert.com revealed in December 2020, some customers were posted goodwill cheques worth between £25 and £100, depending on the level of poor service. These began to be sent in late October 2020, with the last arriving in late March 2021.
HSBC won’t tell us exactly which customers in arrears were due payment under this first redress scheme or full details of what it did wrong, but it says examples of bad practice, which it compensated customers for, include poorly worded letters that didn’t engage those who might have been struggling.
- The SECOND redress scheme is to refund interest and charges, and is ongoing. Some customers who incurred interest or other fees while they were in arrears that they shouldn’t have had to pay are now having them refunded, and are also getting an additional 8% interest on top. Refunds are being sent as cheques or in some cases, if HSBC has your details, will be paid directly into your bank account. HSBC says most payments have now been made but some will continue to be paid over the coming months.
HSBC won’t tell us exactly who is affected or how much average payments are worth, but we’ve heard of refunds ranging from £245 to over £7,000.
While HSBC won’t give us an indication of how many people are getting payments under the two schemes, the four brands currently have 14 million active UK customers between them – plus there are those who have already closed accounts on top. If you’re struggling with arrears and need help, see our Debt Problems guide.