HSBC Formal Overdraft Arrangement Fees

andy19691

We just logged onto online banking to see we're being charged £25.00 Formal Overdraft Fees. Phoned HSBC and they say they've introduced yearly charges for formal overdraft agreements and they say they sent a letter to us informing us. We never received a letter yet they say the charge stands and the only way to waive the fee is to pay back our overdraft and cancel the agreement (our limit is £250 and it's currently -£132).

Can they still charge us for this even though we've never received this letter? Seems a bit unfair but then banks seem to be able to charge what they want!

Any advice appreciated.

dunstonh

Can they still charge us for this even though we've never received this letter?

not getting the letter is unlucky. Although its also a common excuse used when people dont actually read the letter thinking its marketing and chuck it away.

What they have offered seems fair. If you dont want the service and dont want to pay for it they will refund it. If you do want to continue with it then you pay the charge.

Seems a bit unfair but then banks seem to be able to charge what they want!

Its in their published tariff. Personally, I do think the charge is unnecessary but that doesn't matter as what we think is irrelevant. If you dont like it then you can take your banking elsewhere.

Premier_2

HSBC only charge an arrangement fee if you've asked for an authorised overdraft (or an increase in one) during the last 6 months.

i.e. the first authorised o/d arrangement in any 12 month period is free ... although the wording of the letter they send isn't exactly clear on this (but then you say you didn't get that letter anyway)

What is the cost of the Overdraft Service?

Our Fair Fees Policy means that we won't charge you for agreeing either a formal or informal overdraft request – unless they occur frequently.
You won't have to pay an arrangement fee for any overdraft request (formal or informal) in a charging month if you have not made any requests in the last six charging months. Any further requests within a six month period may incur an arrangement fee. However, we won't charge you an arrangement fee if your daily requests total £10 or less.
You won't have to pay more in fees than the maximum you are overdrawn by in your charging month, so a £15 overdraft is not going to cost you £50. You will not have to pay a fee for an informal overdraft request if your account is credited with covering funds by the end of the same day. We will charge debit interest on all overdrawn balances unless we have agreed an interest free period with you. For more information on fees, interest rates and our fair fees policy please see our price list.

http://www.hsbc.co.uk/1/2/personal/current-accounts/overdraft-service;jsessionid=0000_50yz-m2orfL6tCqSTXv8fE:12c58ti63

andy19691

They say they're charging it for all existing overdrafts when they annually review and agree to continue allowing the facility. The HSBC man said it came in during the recession.

Premier_2

andy19691 wrote: »

...The HSBC man said it came in during the recession.

Well tell him we're not in recession any more

StacyB_2

Premier wrote: »

HSBC only charge an arrangement fee if you've asked for an authorised overdraft (or an increase in one) during the last 6 months.

Andy19691's right, that isn't actually correct. I have been charged £25 four times (in the last two years) by HSBC for this "service". I have never requested it, by my own volition, once. That's once every 6 months, which I don't understand. I thought this 'special privilege' was only annual.

Then, I get a letter telling me my overdraft hasn't changed. What a total waste of resources. My overdraft doesn't need changing, HSBC. If I needed it changed, I'd 'phone you! That would cost me £25, as well, though *rolls eyes*.

One problem arises because HSBC will automatically "review" your overdraft limit each year, and they will charge you £25 for this "service". It's called a Formal Overdraft Arrangement Fee. If you choose to contact them about changing your overdraft limit, the fee is called an Informal Overdraft Arrangement Fee.

They say in the Formal Overdraft Arrangement Fee notification letter that if you don't inform them you do not want a review your overdraft, they will charge you £25. However, it is worded to sound like it's necessary for your account, which it isn't.

The arrangement fee is just another way of conning money out of you - all they have to do is send you a letter, which costs under £1 (including envelope & P&P) to print, stuff, and send.

I know that it is partially my fault I've been charged, as I haven't 'phoned them to stop this ridiculous process of theirs, but the annoyance comes from the fact the banks recoup their losses through this; they've ruined themselves! The little'uns (us!) always have to pick up the flack from the bigg'uns mistakes.

Anyone watch Dispatches on Monday (14/06/10) about how the banks have won? The Government sickens me.

Premier_2

StacyB wrote: »

Andy19691's right, that isn't actually correct. I have been charged £25 four times (in the last two years) by HSBC for this "service".....

It is correct - it's on their website - and accurately reflects their current terms.

However, I'm not sure when it was introduced; I think it was a fairly recent change and so probably didn't apply 2 years ago.

Lokolo

Premier wrote: »

It is correct - it's on their website - and accurately reflects their current terms.

However, I'm not sure when it was introduced; I think it was a fairly recent change and so probably didn't apply 2 years ago.

Last September.

And Premier is correct. The charges are automated though. Just go in, point out to them you haven't arranged formally or informally a change in overdraft, and you can get the £25 back.

Premier_2

StacyB wrote: »

...One problem arises because HSBC will automatically "review" your overdraft limit each year, and they will charge you £25 for this "service". It's called a Formal Overdraft Arrangement Fee. If you choose to contact them about changing your overdraft limit, the fee is called an Informal Overdraft Arrangement Fee.

They say in the Formal Overdraft Arrangement Fee notification letter that if you don't inform them you do not want a review your overdraft, they will charge you £25. However, it is worded to sound like it's necessary for your account, which it isn't.

The arrangement fee is just another way of conning money out of you - ....

Sorry, but most of that is wrong too.

Lets start with the only accurate bit - HSBC do now review overdrafts every 12 months.

A formal overdraft is one that is arranged before you borrow. Most banks used to refer to those as authorised overdrafts.

An informal overdraft is one where you authorise a transaction that, when paid, would mean you need an overdraft as you do not have sufficient cleared funds available. This is what most banks used to refer to as an unauthorised overdraft.

Initially (e.g. last year) the wording of the letter advising of the review of the formal overdraft facility was somewhat misleading and could suggest to the reader that a fee was payable (but it wasn't, except where an overdraft had been already arranged in the last 6 months)

They've revised that letter (I had one last month) and it is now much clearer.
The letter clearly states whether a fee is due (the letter is personalised to your situation) and if not, explains in which circumstances a fee is due.

Learn more about HSBC overdrafts on their website:
http://www.hsbc.co.uk/overdrafts
A link that they provide on a leaflet accompanying the letter entitled "Making sense of overdrafts"

the_insider

StacyB wrote: »

Then, I get a letter telling me my overdraft hasn't changed. What a total waste of resources. My overdraft doesn't need changing, HSBC. If I needed it changed, I'd 'phone you! That would cost me £25, as well, though *rolls eyes*.

They review your overdraft to decide if they want to change it, based on your account conduct. If you want it to stay the same or not is irrelevant 99% of the time.