Credit Card Debt of 20p generates debtor letter

amsquared

Can somebody point me to the FCA regulation on issuing default letters to credit card debtors so that I can see if M&S/HSBCs interpretation and application of the regulation is correct.

The story is -

An elderly friend of mine has an M&S credit card which is administered by HSBC. She has missed paying a debt of £0.20 because she thought it would balance out the next time she bought something on the card from M&S. She has now received a system generated letter threatening dire consequences if she doesn't pay the debt. I queried this with the CEO of M&S Bank and was contacted by one of their Complaints team.

While they acknowledged that it was a ridiculous situation to harass an elderly person for a debt of 20p they say that FCA regulations require them to issue the letter regardless of the amount of debt so they have a standard IT system that churns out letters for any debt.

One of HSBC’s Values talks about "using judgment and common sense” unfortunately this appears to be lacking in how they deal with a debt of 20p. M&S/HSBC have apologised but state there is nothing they can do to change their system.

I worked in Financial Services for many years as a process consultant and found that a company's Compliance Department's interpretation of a regulation was often much stricter than the FCA intended. We won a few Compliance challenges that allowed us to make sensible changes to processes which improved the customer experience.

stclair

Personally I would say a debt is a debt regardless of the amount.

You also should appreciate such letters are system generated.

Also companies have a duty to notify customers of the consequences of non/late payment to an account.

CM66

I don't think sending 1 letter is quite harassment. Surely they would have been more annoyed if the bank hadn't told them of this debt and charges / interest had mounted up on such a small amount?

Works both ways!

amsquared

stclair wrote: »

Personally I would say a debt is a debt regardless of the amount.

You also should appreciate such letters are system generated.

Thanks

I know theses letters are system generated but it would be relatively easy to add a rule to the system to throw out a report showing potential debt letters within a specific debt limit. A simple phone call from an agent, handling the case with sensitivity and tact, would have solved the problem straight away instead of the standard heavy handed threatening letter.

stclair

amsquared wrote: »

Thanks

I know theses letters are system generated but it would be relatively easy to add a rule to the system to throw out a report showing potential debt letters within a specific debt limit. A simple phone call from an agent, handling the case with sensitivity and tact, would have solved the problem straight away instead of the standard heavy handed threatening letter.

The letters are standard they are not going to be tailored to different situation/circumstances.

My mom got a letter from virgin media once for 2p.

To prevent such issues it might be worth setting up a DD for at least the minimum payment.

agrinnall

amsquared wrote: »

Thanks

I know theses letters are system generated but it would be relatively easy to add a rule to the system to throw out a report showing potential debt letters within a specific debt limit. A simple phone call from an agent, handling the case with sensitivity and tact, would have solved the problem straight away instead of the standard heavy handed threatening letter.

Very true, but equally paying the 20p debt would have avoided the letter being generated in the first place. As stclair says, get a DD set up and such issues go away.

amsquared

I know there are easy ways to ensure it doesn't happen, I had already suggested she sets up a DD.

Thanks for the replies but can anybody actually point me in the direction of the regulation so that I can challenge the interpretation of the regulation if appropriate. Every system generated letter costs the credit card issuer, in this case considerably more than the debt of 20p, the cost is lumped back into the fees and interest we all pay.

I would argue it doesn't cost any more money to design customer centric IT systems, but financial service companies take the easy "One Size Fits All" approach. I think the current approach doesn't do anything to improve customer loyalty.

My friend has paid the 20p debt at her local M&S and cut up the card.

CM66

They've already told you that FCA regulations require them to send the letters.....

Steve059

"Common sense" and "industry regulators" are phrases that you rarely see in the same sentence.

forgotmyname

We had a mobile phone on orange, it was only used for emergencies so it rarely had any useage.

It was amusing to get a bill for nothing or 3p when the stamp cost them 20p+

Eventually they stopped sending bills, but the phone still works. It was one of those that was pay as you go but didnt require topping up. You used it and they billed you at the end of the month, if you made no calls there was no charge.

amsquared

CM66 wrote: »

They've already told you that FCA regulations require them to send the letters.....

That's what a lot of Financial Services Managers and Compliance departments say but when you check what the regulations actually are you find the company interpretation is much stricter than the FCA intended.

I am in the process of going through the FCA site to try and find the correct paragraph but it is not easy.