Beware - HSBC Loan Rip-off

sizzler52

Hi
This has occurred this morning and thought it would be of interest.
I took out a loan with HSBC 7 yrs ago, a substantial one, the agreement for which included a 'repayment reward' of 10% of the interest paid if it ran for the full term. It finished three days ago and today I received my repayment reward. However it was a quarter of what it should have been
I set about investigating. About a year ago, I received a letter from HSBC informing me that they had made errors on the loan statements they had been sending to their customers and by way of compensation, they were going to repay all interest paid from the date of their error to the date of their letter. I subsequently received a substantial sum as I had been paying the loan repayments for 6 years. I telephoned HSBC to enquire how this would affect my loan agreement in respect of the repayment reward and established that whatever HSBC decided to offer in compensation cannot impact in any way on the loan agreement. Happy with that, I co tinted to make payments to loan completion.
I sat down this morning and worked out the figures. If I take the compensation amount from the total interest paid and apply 10% surprise surprise it works out to within 3p. They have therefore ignored the interest to the tune of the compensation payment from the calculation of the 10% of total interest paid, thus recouping a sizeable chunk of the compensation paid. Good job I noticed 😄 On ringing customer service I let them go through the usual babble and excuses and then told them exactly what they had done. One flustered operative disappeared for 25 minutes (another £12 mobile call bill they now owe me) then cane back and tried to make excuses that I would have to hold on a bit longer. No said I you will call me back and it had better be today. Of course, he can't guarantee that, however, 16 minutes later one flustered supervisor phoned me personally went through the story again, agreed that the compensation should not be taken into any account and ran off to sort it out after I gave him till this afternoon before I start reporting their action to appropriate authorities.
Potentially, they may be doing this to thousands of customers.
Who are best authority to report this to. They could potentially make millions from unsuspecting customers.
Thankyou.
Comments will be read with interest

PeacefulWaters

Interesting. Technically they have rebated what they promised, as you've been charged a lot less interest than the agreement originally stated.

You complain. Perhaps without using phrases like "Rip off". Ask for reimbursement of the difference and costs.

If they don't play ball you escalate your complaint to the FOS.

How the FOS will treat things isn't clear. But it'll cost HSBC if you do that. If the FOS get a series of identical complaints I believe there is a reporting mechanism to draw FCA attention to the matter.

sizzler52

Hi Thankyou. Yes I totally agree that I've paid considerably less interest than I would have done. The point is that what they chose to offer in compensation cannot change the terms of the agreement they made in the first place and that was confirmed by HSBC when I received the compensation by phone call. I could have paid the loan off early but received less benefit than waiting for the loan to run its course, as advised by HSBC themselves. If, as you suggest, they have rebated what they promised, then they have not met the level of compensation they claimed to offer at the time, so either way they are in breach of their own stated policies

Nearlyold

HSBC have refunded the interest they were not allowed to charge (due to credit legislation) for the period of "faulty" statements and have calculated your repayment reward as 10% of the interest you actually paid so technically as peacefulwaters says they have rebated what they promised. I guess it would also depend on how the original contract was worded - they didn't choose to offer an amount as compensation they were legally obliged not to charge interest for the period when the statements had missing information (in most cases this was a failure to point out you could make an early settlement in the statement)

I suspect FOS may actually take HSBCs side in this if it comes to it as they often judge things on what is fair and reasonable but who knows.

As suggested, when negotiating with HSBC or putting in a complaint you should try and tone down the "Rip Off" rhetoric because overall you are better off and its unlikely to help your case.

fwor

sizzler52 wrote: »

No said I you will call me back and it had better be today.

I'd agree with what Nearlyold has said - if you want to have your cake and eat it (e.g. wanting them to pay you a reward for interest that you haven't paid, because they refunded your payment) then you need to talk nicely to them.

Most Customer Services departments will play ball so far, but they know that there are a small number of customers who are impossible to please. If they decide that you fall into that category, they will stop trying to help, and just suggest that you report it to whoever you want (in the nicest possibly way, of course).

As already said, the deciding factor will be the ~exact~ wording of the offer terms & conditions, so we can't know for sure - but banks are not known for using sloppy wording in their contract terms...

meer53

It's not a rip off really, it's an error, probably made by a computer when calculating your reward due to the previous refund. The computer will see you've been refunded some interest and consequently adjust your reward. Threatening to report them (for what i don't really know) won't help. Let them sort it out for you, you only noticed it today !

KJSmith

sizzler52 wrote: »

I telephoned HSBC to enquire how this would affect my loan agreement in respect of the repayment reward and established that whatever HSBC decided to offer in compensation cannot impact in any way on the loan agreement. Happy with that, I co tinted to make payments to loan completion.

In my opinion you may get a small amount of "compensation" for being told information that could have mis-led you to believe how much the reward repayment would be.

Then again, the compensation hasn't actually impacted the loan agreement as you have correctly received 10% of the interest you were charged :think:

[Deleted User]

You OP got more at the end of the day than you were expecting? And you were ripped off???

IAmWales

You are eligible for 10% of the interest paid. You were refunded a large amount of interest due to their error, so the interest paid would be reduced by that amount.

You seem to be asking for 10% of something you haven't paid.

Shakin_Steve

When you say that you 'established' that the compensation they paid you would have no impact on the loan agreement, what exactly do you mean? Did they just tell you this in a phone conversation or have you got it in writing?

PeacefulWaters

The point is that what they chose to offer in compensation cannot change the terms of the agreement they made

What does the agreement say?

"10% of the interest we charge"

"£xxx.xx representing 10% of the interest due under the agreement"

My two sentences imply the same thing but would lead to different numbers in your circumstances.