Advice please - HSBC closed my account, for less than £20 overdrawn, when the overdraft limit has been 1,250!

[Rudadiz]

A big hello to everyone on the forum – been reading your posts for two days and absolutely flabbergasted by some of your misfortunes inflicted by the banks. I m seeking abit of advice myself, for a matter that has come up as a small element in a few cases, but hasn’t been clearly addressed (I hope I m not alone here):

 

First let me state all that found out below are through my personal, voluntary action. Up to now I still haven’t received any correspondence from either HSBC or Metropolitan Collection Service (I could still be blissfully unaware of everything!).

 

Last Friday afternoon, I was trying to use online banking to pay for an overdraft of less than £20 into my HSBC Advance Account (upgraded from a normal current account by HSBC, offered via Telephone marketing in July), just to find that it’s not there. A few phone calls later, I discovered that the account has been closed by HSBC without any form of notification to me. Now -

 

1. I have been banking with HSBC for 11 years, on the same account. This account has been used to receive salaries, etc. since I have started working (before that a 16-19 account, then a student, then Graduate), and every month around £1,100 is moved to a joint account with a different bank (Halifax) for family finances. There is a £1,250 agreed overdraft limit on this account, untouched till recently.

 

2. I finished my previous work contract in June, and have been job hunting since. At the time I moved the remaining balance to the joint account, with a few quids’ worth left. Because I have no money coming in, this account has seen no cash flow since. In July I think, a direct debit which I forgot to cancel took around £17 out of it and made it in arrears. I am aware of it, but thought a) I should leave it till I get my next job, and b) I have the agreed overdraft. I am tracking the interests added onto this amount, which is as stated in the policy. I have since cancelled that direct debit (both with HSBC and where the payment is going to). No problems there.

 

3. I also understand that it is the T&C that if I am in debt, I should make regular payment into the account. But first of all, I specifically asked, when being upgraded, if I need to maintain a certain amount of monthly cash flow for the Advance Account. The answer was a clear NO. As far as I am aware, there isn’t a definition of “regular” in the legal sense. Second of all, the T&C states that HSBC reserve the right to demand immediate payment, or stop the overdraft facility completely. There has been no correspondence to me with any such demand (confirmed by HSBC staff at my local branch), or any attempt to try to agree with me a course of action. And in any case, nothing in the T&C warranted them to close my account without any form of correspondence – for a debt of less than £20, under an overdraft limit of 1,250! It has been mentioned that the bank has the right to close an account as they please, but when I demanded to see that as part of the T&C, staff at the local branch failed to produce evidence (Is it actually true, by the way??).

 

4. After the phone calls on Friday afternoon, and visit to the local branch on Saturday, the situation is as follows: My account has been closed by the “Collection Department” due to “bad debt” on the 8th of December, with a letter drafted to tell me that it is closed on the 7th, which I still haven’t received (and I have to stress, debt of less than £20! The bankers probably pay more to have their shirt cleaned). And everybody’s favourite Metropolitan Collection Service now has my detail to collect the money from me. I explained everything to the staff at the local branch, and pointed out holes in all their arguments, and the final answer was “once a decision has been made unfortunately it is irreversible”, and “it is not possible to reopen your account, and you won’t be able to open future HSBC current account”. So much for being the world’s local bank!

 

I guess I need advice because:

a) the bank account is my first and for a long time only personal account which has a lot of sentimental value to me, and to have it taken away in such a blunt manner without nearly enough justification is impersonal, intrusive, and downright absurd (and all for less than £20, with a £1,250 overdraft limit!!);

 

b) Now that MCS is on my tail, could anybody advise what it’s going to do to my credit rating (Again, for less than £20!!)? I m planning to take out a mortgage in 1-2 years… L ;

 

c) There has got to be somewhere I could complain about the whole situation? This looks to me a procedural injustice to say the least. I m not saying there is nothing I couldn’t have done better; but when the risk of something happening has not been outlined and communicated, it is surely not justifiable to inflict the consequence of such risk to a customer? And the branch manager had the cheek to say “all our decisions are carefully made, and once a decision has been made, HSBC will stand by it”. Which is basically “whatever we want to do is final, and you can just go and stuff yourself!”

Would be interested hearing what you guys have to say. The irony here really is that I discovered all this when I was trying to settle this small “debt”… A massive thank you in advance! And Happy Christmas – not sure I ll have one now!

[rdm2006]

They can close any account providing they give 30 days notice - this is in their t & c's - they can also close an account immediately if they believe that it is being used for unlawful purposes (not suggesting you are - i am just saying how it is).

 

You can complain to the Financial Ombudsman Service (FOS are a little busy at the mo so dont expect anything too soon)

 

From my own experience, your interpretation of their actions “whatever we want to do is final, and you can just go and stuff yourself!” is absolutely spot on (shame we all had to learn the hard way).

 

DO NOT WASTE ANY SENTIMENT ON THESE CRETINS or the account you had with them - if the debt is less than £20 then pay it, it is worth far more than that to be rid of them.

 

take satisfaction in the fact that they will be charged £400 by FOS to deal with the complaint and you may be awarded £125.00 compensation for the closure of your account (thats what i got)

 

Their actions may also be a breach of the Unfair Commercial Practices Trading Regulations (UCPTR 2008) so SAR them for all info they hold against you.

 

other than that there isn't more I can tell you other than put this behind you and count your blessings to be free of them, as do I

Edited December 15, 2010 by rdm2006

[Rudadiz]

rdm, Thanks so much for your reply. No I don't hold any sentiment on them (I m daft, but not that) but when something you have had since 17 has been snatched away from you it is impossible not to feel a big void in your heart.

 

The info you provided was very valuable. Do you (or anybody) know what this kind of episode does to one's credit history/future credit rating? Will it stick with me for the next 6 years?

 

Thanks again!

Edited December 15, 2010 by Rudadiz
typo...

[gil_jnr]

Do you (or anybody) know what this kind of episode does to one's credit history/future credit rating? Will it stick with me for the next 6 years?

 

Regarding being passed to collections, I was informed by at least 2 different members of their staff during my own dispute that just having your account passed to them does have a detrimental effect on your credit score, but am not sure how just how accurate that is or if they were trying to intimidate.

 

If that IS the case, then surely such action is in direct contravention of the Banking Code which states that members must give 28days notification that they are to inform the crediit reference agencies.

 

The debt would only affect you for 6 years if the creditor sought a County Court Judgement action against you, but that is one of the last steps in their process of trying to secure repayment, so don't worry about that.

 

You could also, when making your formal complaint in writing, send a copy via email straight to the top to the chief exec's office to add some weight to your complaint.

 

Send to: Paul Thurston, CEO, at: [email protected]

 

Hope that helps

[rdm2006]

rdm, Thanks so much for your reply. No I don't hold any sentiment on them (I m daft, but not that) but when something you have had since 17 has been snatched away from you it is impossible not to feel a big void in your heart.

 

The info you provided was very valuable. Do you (or anybody) know what this kind of episode does to one's credit history/future credit rating? Will it stick with me for the next 6 years?

 

Thanks again!

 

Although not impossible, it is very improbable that they would mark your credit file just yet, and please be aware that metropolitan is an "in house collection department" of HSBC

[Carningli]

Hi Rudadiz,

I don't want to put a damper on previous comments but HSBC as you have found out act quite irrationally, they seem to have a host of incompetent or poorly trained staff. You must be prepared to face anything and Court Action is a possibility so take the time now to send a complaint to the FOS and then read up about Court procedure. If after 11 years of Banking with them they are going to Court for £20 plus costs they must be barking mad. Pay it at the Court steps. or before and let them be.

Carningli

[rdm2006]

I would also send an SAR for all info held against you (Cost £10) (If you have other accounts, mortgages and Credit Cards this will cover those too). This could be very revealing and you may discover what cockup was made, and if it was their fault it may also be an Unfair Commercial Practice breaching the Consumer Protection from Unfair Trading Regulations ( CPUTR 2008 ).