Banking News OFT Could Cost HSBC 302 Million Pounds In Unfair Bank Charges 1211
OFT could cost HSBC £302 million in unfair bank charges
05 March 2008 / by Joy Tibbs
Its latest annual report states that: “Based on the facts currently available to it, and a number of assumptions, HSBC Bank plc estimates that the financial impact could be approximately $600 million [approximately £302 million].”
HSBC is one of a number of UK financial groups that has been taken to task by the Office of Fair Trading (OFT) over charges connected with its unauthorised overdrafts, which the OFT claims are unfair. Consumer group Which? has also described the fees as “disproportionate”.
Despite this, the bank is holding firm to its conviction that the fees are justified. “HSBC Bank plc considers the charges to be and to have been valid and enforceable, and intends strongly to defend its position,” the report affirms. It also points out that the conclusion of the case could be a long way off and that “a wide range of outcomes is possible”.
“The proceedings remain at a very early stage and may, if appeals on the preliminary issues (or, subsequently, on substantive issues) are pursued, take a number of years to conclude,” says the 2007 report.
Although preliminary issues were presented at the Commercial Division of the High Court from January 17 to February 8, there has been no clarification, as yet, regarding the final claims that are to be brought against the various financial groups.
The first step is to determine whether the Court will decide that some, all or none of the charges should be tested as unfair bank charges and/or tested as common law penalties. Next it must assess each charge over the period under review – which spans more than six years. Therefore, it is unsurprising that this may take time, particularly if appeals are pursued.
The bank says that an adverse Court decision would be “contrary to HSBC Bank plc’s current assessment”, appearing confident that its fees will not be deemed unfair. It concludes that, although it might end up repaying customer charges of more than £300 million, this figure may not actually be an accurate deduction due to the nature of the case.
“To make an estimate of the potential financial impact at this stage with any precision is extremely difficult, owing to (among other things) the complexity of the issues, the number of permutations of possible outcomes and the early stage of the proceedings,” it says.
Other institutions involved in the trial are Abbey National, Barclays Bank, Clydesdale Bank, HBOS, Lloyds TSB Bank, Royal Bank of Scotland Group and Nationwide Building Society.
© Fair Investment Company Ltd