HSBC’s Damascene Conversion

Has HSBC seen the light? I wrote this article, at their request,  for a well know forum that exposes bank rip-offs but who ran a mile when they realised it was about their paymasters HSBC. So, feel free to use the article wherever. All the details are evidenced with links.

HSBC’s Damascene Conversion?

by Mr Ethical

I have been bemused and not a little angry to hear Douglas Flint, Group Chair of HSBC Holdings state at the launch of the Chartered Institute for Securities and Investments (CISI) “Speak Up” initiative on 23 September that whistleblowers should be celebrated and rewarded. It was slightly reassuring though to know that the CISI checked my website before the launch, although disappointing that they considered it safe to proceed. No doubt Mr Flint would have voiced his concerns about my revelations before proceeding. Here is a screenshot of their visit to my site:

cisiSo let’s examine HSBC’s commitment to whistleblowers, which must presuppose them embracing a culture of honesty and transparency.

Prior to his becoming Group Chair, Douglas Flint was Finance Director at HSBC for 15 years. In 2003 HSBC purchased subprime lending specialist HFC Bank Ltd. At the time of the purchase the John Lewis Partnership sold their store account business to HFC, which at that time already managed the store accounts for DIxons, Currys, Furniture Village, PC World, B&Q and made personal loans to subprime borrowers under the names of HFC Bank and Beneficial Finance.

Douglas Flint, on examining HFC’s accounts as part of due diligence for the purchase,  must have wondered why there was no provision in the accounts for legal costs of recovering delinquent accounts, of which there must be quite a few given the status of the majority of their clients. The reason there was no provision for payment of legal costs is because the bank added a flat fee of 16.4% to accounts referred to outside lawyers, to cover the cost of recovering the debt. This sum was added on whether the solicitors issued proceedings or not and in some cases exceeded £5,000. In other words the debtor paid the bank’s legal costs and the bank never had to pay solicitors anything.

In November 2010 the Office of Fair Trading made an order against HFC Bank (HSBC) in the following terms.

st1The order, which can be seen in it’s entirety here, went on to say that if the bank wished to add what they called a “collection charge” then they had to change the terms and conditions of their credit agreements to allow for them.

One thing that is very interesting about this order is that it is dated 17 November 2010. Stephen Green, Chair of HSBC holdings at the time was created a life peer on 16 November 2010 by David Cameron, as Baron Green of Hurstpierpoint, of Hurstpierpoint in the County of West Sussex, and was introduced in the House of Lords on 22 November.  By a strange coincidence the OFT order was only released to the public via a press release dated 22 November 2010. Furthermore, it would have been very difficult to discover that the order against HFC (HSBC) was in connection with the “collection charges” because the press release was concerning Charging Orders, something entirely different, and the order was tucked away at the bottom of the press release as a pdf attachment.

So there was no possibility that an OFT order against HSBC telling them to stop adding illegal costs to debts would reach the public’s attention at the time the bank’s Chair was being made a Lord and Trade Minister.

But it did reach my attention, and this is where it gets a little embarrassing for HSBC. I had a meeting at HFC Bank’s head office in October 2003 when I told the bank’s solicitor Duncan Hamilton that the charges they were adding to accounts were illegal. This was in my capacity as head of Debt Recovery at Weightmans solicitors, where I acted for the John Lewis Partnership and had done for 20 years previously. It appeared that as soon as John Lewis sold their accounts to the bank, the bank intended immediately to add unlawful charges to the accounts.

I reported Weightmans to the Solicitors’ Regulation Authority (SRA) in 2006 and they upheld my complaint that the charges amounted to unlawful contingency fees. Here is an extract from their order:

SRAThe full order can be seen here.

In 2012 I reported the bank’s solicitor Duncan Hamilton to the SRA. Shortly afterwards he mysteriously left the employ of HSBC and started work at Restons solicitors, the other firm that acted for the bank besides Weightmans and also added unlawful charges. Here is the firm’s announcement of the appointment.

I also reported the bank to the Financial Services Authority (as was) in December 2012. They took no action and in April this year 2014 the Financial Conduct Authority sent me an email explaining why they had taken no action. They said that the bank’s agreements allowed them to add a collection charge. In June 2014, Joel Benjamin a financial campaigner with Move Your Money, wrote to HSBC asking them why they had not taken any action on my allegation. The  bank replied to him, by email, in exactly the same terms as the FCA had replied to me two months earlier. The text had been copied and pasted between HSBC and the FCA. The details of the emails are here

So, whilst I welcome Mr Flint’s new found appetite for openness and transparency and his suggestion that whistleblowers should be rewarded, I think it can be seen from the above that I have been whistleblowing against the bank’s wrongdoing for 11 years and it has been covered up at the highest levels so as not embarrass the bank and the government, with the clear collusion of the financial regulator.  I now look forward to receiving my reward.

The other regulators should hang their heads in shame over this whole, wholesale establishment cover-up. The sums involved I estimate at £1 billion and if the bank paid compensation to those they had wrongly charged, approximately 5-600,000 people would receive an average £2,500 (with interest) back.

Full details can be seen on Mr Ethical’s website.