The Inspirational Nicholas Wilson
The financial regulator will open a new investigation into whether HSBC overcharged customers who were struggling to make credit card repayments, after years of campaigning by a whistleblower.
The Financial Conduct Authority, which has been issued with a stinging rebuke from its own complaints commissioner, said that it would “reconsider its decision not to look into allegations” that HFC bank, a subsidiary of HSBC, charged customers too much to cover the costs of trying to recoup missed payments.
Nicholas Wilson, a lawyer, has campaigned to bring the charges to the attention of the regulatory authorities. Mr Wilson has alleged that HFC’s practice of levying a charge on the cost of recovering arrears — taken as a percentage of the sum recovered and not the actual cost of the recovery — was unlawful.
Having contacted the regulator in 2012, Mr Wilson made several more attempts to highlight the issue, including submitting a Freedom of Information request to find out what had happened to the investigation. Finally he got in touch with the office of the complaints commissioner.
Antony Townsend, the commissioner, issued a letter on December 3, in which he said that the FCA’s actions were characterised by “delay and muddle” that “bordered on the farcical . . . The FCA should be transparent and, where it has made mistakes, freely admit it. In this case, the FCA’s defensiveness is wholly unsatisfactory.” The FCA should “offer a full apology for its serial failings” to Mr Wilson, the commissioner added.
Dominic Lindley, a consultant who used to run the financial services policy team at Which?, said: “The FCA is supposed to take whistleblowers seriously. There now needs to be a transparent investigation.”
HSBC bought HFC as part of its acquisition of Household, the American consumer finance group, in 2003. The business has managed store cards, including that of John Lewis. It stopped the charges, which were laid out in its terms and conditions, in 2010. The bank said that it would “co-operate fully with any FCA investigation”.
The commissioner noted that the FCA had assumed responsibility for consumer credit from the Office of Fair Trading on April 1, 2014. The FCA came into being in 2013, replacing the Financial Services Authority. The FSA believed that the matter should be passed to the OFT, but did not send it on. The FCA referred it to the OFT only a few weeks before it was itself due to take over responsibility for consumer credit.
The commissioner also criticised the FCA’s response to Mr Wilson’s FoI request, in February 2014. Having asked HSBC for information, the regulator included the bank’s wording in its own document, without attributing or verifying it. “The FCA simply should not have quoted directly this information without first verifying that the information was correct,” Mr Townsend said.