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HSBC bracing itself for another hit
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(05-03-08) - Having revealed details of writedowns amounting to over £8 billion just days ago, the HSBC (www.hsbc.co.uk) bank said it could take a further £300 million hit should it taste defeat in the OFT ‘fair charges’ test case. writes Dan Drage dan.drage@consumerchoices.co.uk |
A test case on UK bank charges began earlier this year in the High Court, with seven banks and one building society accused by the office of fair trading (OFT) of imposing ‘unfair’ overdraft penalty fees.
The bank outlined the following in its annual report:
‘Based on the facts currently available to it, and a number of assumptions, HSBC Bank Plc estimates that the financial impact (of losing the test case) could be approximately $600 million.’
That would be on top of refunds of £115 million it paid out last year, before refunds were suspended across the industry pending the court decision. The total paid out by banks in overdraft fee refunds stands at the £400 million mark.
An outcome from the case is expected in either late April or early May, although the losing side is expected to contest the ruling, which could leave the issue in judicial limbo until 2009.
Chris Eagle, Commercial Manager at CreditChoices, can understand why banks are beginning to worry:
‘2007 was a gloomy year for banking. The credit crunch tightened it’s grip on the economy in the latter half of the year, meaning most banks at best had their profits siphoned off, and at worst made an operating loss. Defeat in the OFT test case would compound their misery even further, but the fact that HSBC are budgeting for this eventuality should give hope to those waiting patiently for refunds and compensation.’
Related Articles:
Bank charge case gets underway
OFT strikes first blow
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