Banks and Credit Card problems

Carpetman

My 21 year old son was given an overdraft facility with HSBC for £1,000, but when he was made redundant this was reduced to £250, on the basis he could no longer sustain such a limit. He then had used £500 of the original £1,000 limit so now he was deemed to be over the new limit, and of course now fell in to the realms of very high charges.

Seeking help he went to the bank who arranged for him to have a HSBC credit card, with a limit of £1,000. They then explained that he could do a cash transfer from the CC to pay off the excess on the overdraft, which he promptly did. Of course every time you transfer cash from a CC they charge a handling fee and interest from the date of transfer.

My questions surround the advice that was given and if there can be any come back against that advice.

1) If, in the banks view, he couldn't sustain a £1,000 overdraft facility should they have recommended a CC with the same credit limit?

2) If the CC was the right recommendation, shouldn't he have been advised to do a balance transfer at 0% interest over a 6, 9 or 12 month period, instead of just paying off the overdraft with a cash transfer?

3) Has he been the victim of a mis-selling?


Due to the recent bad weather he hasn't been able to work (landscaping), which means that he has now transferred more money from the CC to his bank account and has almost used up all the credit limit.

Yes I know he shouldn't have done all this, but now I know what has happened - constant calling from HSBC wanting to know when he will be in and now Withheld and International numbers that don't answer when you pick up gave it away - I need to find a way of helping him out.

Cheers
Carpetman

CannyJock

Carpetman wrote: »

1) If, in the banks view, he couldn't sustain a £1,000 overdraft facility should they have recommended a CC with the same credit limit?

2) If the CC was the right recommendation, shouldn't he have been advised to do a balance transfer at 0% interest over a 6, 9 or 12 month period, instead of just paying off the overdraft with a cash transfer?

3) Has he been the victim of a mis-selling?

1) Different products, different departments from the same brand. Arguably he could have used the credit card for his normal purchases and used his own money to reduce/clear the overdraft. Depends largely on the OD fees and the relative APR's.

2) HSBC don't allow 0% balance transfers to your current account that I've ever heard of. He should have been aware from reading the summary information that a cash advance comes with prohibitive interest and the allocation of payments means it's usually the last thing to be cleared so you're stuck with the high interest until you can clear the card balance in full.

3) Don't think so. They offered him the option to get a card, but didn't dictate how he uses it.

Won't do any harm to raise a letter of complaint and if necessary take it further to the FOS, but I wouldn't hold out hope that this will clear the debts for him. He might get some interest back.

Critical thing for him now is to make sure that he can make at least the minimum payments on his credit card or he'll do serious damage to his credit rating.

magpiecottage

I think he has a legitimate grievance. The Bank seems to be in breach of BCOBS 5.5.1 and, according to BCOBS 5.5.4, Principle 6.

These are specific rules a Bank should comply with. I cannot see how reducing an overdraft to below the agreed amount and thus creating a breach of contract would be seen as reasonable.