informal/formal application fee for HSBC overdraft

benjib98

I have just applied for an overdraft with HSBC. I am with HSBC for some time and this is my first application for overdraft during the years with them. I applied for a £300 limit, which after checking/updating my personal details the lady on the phone confirmed and said it is available from today for the next 12 months.
She mentioned the possible £25 application fee, which she said she will confirm at the end of the application process - and which she did confirm I have to pay.
Just after agreeing to it, I now check the HSBC website, which says:
"You will not have to pay for your first agreed overdraft request (formal or informal) in any 6 month period. Each further request in a 6 month period may incur an arrangement fee."
and
"We do not apply Arrangement Fees for overdraft requests (either formal or informal) unless they are made frequently. The Arrangement Fee you are being advised of today is payable because you have made more than one overdraft request over the last 6 months."
I had an overdrawn sum on my account 2 months ago, but it was the only overdrawn money for my account in the last year before applying for an overdraft facility. I am just curious what shall I do, should I send a complaint letter requesting a refund for the £25 application fee?

Lokolo

Ok heres how it goes.

This isn't the first time you have applied for an overdraft because of the unformal overdraft before.

The rules on HSBC and overdrafts are:

If you have changed your overdraft within the last 6 months of your revew date, by yourself or automatically from payment, which is larger than £10 you will be charged £25 overdraft review fee. In the 6 months after, if you choose to amend your overdraft (cancelling does not count) you may incur (more than likely I suspect) a £25 review fee charge.

You can see your review date online.

You said 2 months ago you were overdrawn, this is an informal request. Today you made a formal request, therefore you have made 2 overdraft requests in the last 6 months.

benjib98

Righ I see.
Just for curiousity:
if the informal request happened by "me going overdrawn", shouldn't that mean that the bank should give/offer me an overdraft facility????
I went overdrawn 2 months ago, for which I was charged £25.11 by HSBC where 11pences are interest and £25 are "Arrangement fee". I assume that £25 fee is for the informal overdraft facility, right? So how come that the lady told me I have had no overdraft facility with my bank account? Is the informal overdraft counted differently?

Lokolo

Informal is pretty much a lame attempt at a temporary overdraft.

Basically what you did was you had say £5 in your account and you want to buy something for £25. When you entered your pin your bank then said, ok so you need another £20, we will give you an informal (you didn't ask for it) overdraft of £20. As soon as you go back into the black, the informal overdraft is then gone.

If you got charged £25 then I shouldn't think you should have this time. There are a few HSBC employees (ldavies and ShelfStacker), wait to see what they say as they more likely know more than me lol.

ShelfStacker_3

Informal OD facilities only last for certain amounts of time, and they count as an "event" for the purposes of working out when you should be charged a fee. As far as I can tell, the charge is entirely correct.

GrammarGirl

As far as I understand it, the £25 'informal arrangement fee' is basically HSBC's wording for an overdraft charge - either you have no OD facility on your account and you went overdrawn, or you have an OD facility and you exceeded the limit. The £25 they charge for this is just that - a charge.

Now, the formal OD charge is taken when you yourself make a change to your OD OR when HSBC decide to review or make a change, and this change comes within 6 months of your last.

For example, I exceeded my OD limit a few years ago and was charged £25 (I was refunded this under the unfair OD charges clause). Then 3 months later my OD review date came up, my interest-free portion was reduced, and I was charged another £25 for the pleasure. Thanks, HSBC!

Seriously though, they do make their charges quite clear and if you have been charged for an informal OD just ring them and see if they'll refund it. If it's your first 'offence' they might be lenient!

Scousebird_2

benjib98 wrote: »

I have just applied for an overdraft with HSBC. I am with HSBC for some time and this is my first application for overdraft during the years with them. I applied for a £300 limit, which after checking/updating my personal details the lady on the phone confirmed and said it is available from today for the next 12 months.
She mentioned the possible £25 application fee, which she said she will confirm at the end of the application process - and which she did confirm I have to pay.
Just after agreeing to it, I now check the HSBC website, which says:
"You will not have to pay for your first agreed overdraft request (formal or informal) in any 6 month period. Each further request in a 6 month period may incur an arrangement fee."
and
"We do not apply Arrangement Fees for overdraft requests (either formal or informal) unless they are made frequently. The Arrangement Fee you are being advised of today is payable because you have made more than one overdraft request over the last 6 months."
I had an overdrawn sum on my account 2 months ago, but it was the only overdrawn money for my account in the last year before applying for an overdraft facility. I am just curious what shall I do, should I send a complaint letter requesting a refund for the £25 application fee?

This is a simple one to explain (god I wish they were all this simple in the branch I worked in)

You went overdrawn on your account 2 months ago-this is an informal request and a £25 charge applies plus the 11p debit interest.

You then requested that a formal limit be applied when you made your request over the phone recently-this is a formal request and ALSO levies a charge

Hence your charges are fair-HSBC are unlikely to refund any charges and the account conditions state a charge will be applied for going overdrawn without a formal limit and the second charge was levied and you were notified and verbally accepted these terms before the overdraft was sanctioned.

Sorry to break that one to you!

Sharon87

Another question here as HSBC is so confusing:

If say I don't go overdrawn and it's been 7 months since my renewal date, if I put a request in for an increase in overdraft will I be charged £25?

Scousebird_2

It's usually from 12 months of the agreed formal o/d date that if you make a request to change the limit-the system will charge. Try to avoid increases over a lesser period as it will keep showing as a credit search on your credit files.

purpledobra

I have had a £50 overdraft with HSBC for about a year, and have just received a letter saying they have reviewed it and are happy to let me continue with it, and will charge me £25 arrangement fee for the pleasure of them doing abolutely nowt. Can they do this? and what would the best course of action be for me?

Cheers

Lokolo

Have you been over it?

ShelfStacker may need to answer this one but I think if you go into branch you can get the money refunded as you have not requested and overdraft in the last 6 months (unless you did formally - i.e. have you been over the £50 limit?)

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Not sure if it is 6 months, I seem to remembering hearing something about the 6 month period as I explained in the second post.... Wait until a HSBC employee confirms with their wise knowledge before though!