HSBC Bank Currency Charge for payment return

CatDew

Hello, we have a Business Bank account with HSBC (Sterling), we made a payment to HSBC International in France to our client, (in Euros) which we converted during the initial transfer. Unfortunately we paid it into the clients sterling account and not their Euro Account . HSBC International have taken it upon themselves to return the money,  however our UK HSBC bank have converted it back to sterling at a loss, to us, of £1150.  Surely this is unethical? What can we do to get this money back, its such a large sum of money to loose just for a clerical error!  Any help would be much appreciated. 

HillStreetBlues

You need to explain how the £1150 was calculated.

grumbler

CatDew said:

HSBC International have taken it upon themselves to return the money,  

I think they could have converted it on the recepient's side, but the loss would be probably the same.

CatDew

I believe its in the currency conversion! I spoke to HSBC UK when we received the returned payment as it was a different amount, they gave me totally misleading information and said it wasn't related and was a payment from someone else.  Its only after I checked the payment confirmation that I noticed the euro amount we sent was the same as the Euro amount that was sent back before it was converted. 

eskbanker

A couple of additional currency conversions at sub-optimal rates could easily account for a substantial charge if the sum itself was large enough - what sort of percentage does £1,150 represent?

CatDew

Sorry if I was not clear, £1150 is a large amount but that's not the issue. HSBC UK charged us to transfer the money from sterling to euros (in their exchange rate) , they paid their own bank in euros,  but the money was returned in sterling (at their exchange rates)! .  They have charged us twice for the same transaction. Surely that represents a conflict of interest. They are making money on a clerical error! There must be a way for us to get the transactions revered - its the same bank!! Surely there are banking regulations that prevent such things from happening? 

eskbanker

I'm not aware of anything that would preclude them from doing what they've done - the fact that the two banks are ultimately part of the same group doesn't literally mean that they're 'the same bank', but was the clerical error yours or theirs?

eDicky

CatDew said:

I noticed the euro amount we sent was the same as the Euro amount that was sent back before it was converted. 

but the money was returned in sterling (at their exchange rates)!

It's still not too clear what transpired, but at least two conversions were made, and a bank such as HSBC puts ~3% margin each time. GBP increased in value against EUR in recent days so depending on when this took place it could have added to your loss. It could just as well have gone the other way in your favour. I don't think you can really blame HSBC for the result of your own clerical error, and there are better ways of making a cross-currency transfer in the first place.

HobgoblinBT

I think that your “charge” could be made up of 4 foreign currency exchanges between sterling and euros.  The bank sells currency at the bank’s selling rate and buys it at the bank’s buying rate and there will be a margin between the buying and selling rates.

1. You instructed the bank to convert GBP to EUR to send to what you believed to be an account designated in EUR.

2. The destination account was designated in GBP, not EUR so the EUR would have been automatically converted back to GBP in order to credit the account.
3. The funds were returned via the same routing which would have necessitated a conversion from GBP back to EUR as your bank sent EUR.
4. In order to return the funds to your GBP account, the EUR were converted back to GBP.

Unfortunately, it sounds like the bank have followed your instructions (all be it different to what you intended) which has led to multiple currency conversions. There may well have also been a fee taken either by the remitting or beneficiary bank for dealing with the returned payment.  

The bank is likely correct in what they have done by following your instructions. Now whether morally it is right for what seems like a small clerical error to result in such a penalty is another matter.

If you have an allocated relationship manager I suggest that you contact them to explain what has happened and see if they will make a goodwill gesture to cover all/some of the loss.  If you don’t have it already, ask for a copy of the outgoing SWIFT message and the return payment SWIFT message. This will be a list of code lines and you can find a key to what each number means through a Google search.

If you don’t have a relationship manager, make a complaint.  It might be worth your time to check out the financial ombudsman website that lists sample rulings to see if similar cases have been reviewed in the past as historic case history is often used in ombudsman decisions, as well as by many banks when deciding on how to adjudicate on complaints.

Hope that helps.