Not upheld: irresponsible lending and unfair account closure complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr S complained that HSBC irresponsibly provided him with a £1,000 overdraft facility from October 2017, claiming he was in receipt of benefits with no ability to repay. The overdraft remained interest-free until August 2024, when interest began to accrue. HSBC engaged with Mr S multiple times from August 2023 onwards expressing concerns about repeat overdraft use and made 14 phone call attempts between October and December 2024 to discuss his account, but Mr S did not respond. After the account balance remained above the agreed limit for over three months, HSBC closed the account in March 2025 and passed the debt to a third party collector. The ombudsman did not uphold the complaint, finding HSBC's actions reasonable and in accordance with applicable guidance, and noting that Mr S's vulnerability was not disclosed until after the complaint was made.

The Ombudsman's reasoning

The ombudsman found that HSBC provided the overdraft on an interest-free basis from October 2017 to August 2024, meaning no financial redress would be available for any unfair lending during this period. From September 2024 onwards, HSBC took reasonable steps to engage with Mr S through multiple communications and 14 phone call attempts, but Mr S did not respond. HSBC's decision to apply interest, close the account, and report the default to credit reference agencies was in accordance with ICO guidance and the account terms, particularly given the account balance remained above the agreed limit for over three months. Mr S's vulnerability was not disclosed to HSBC until after the complaint was made, so HSBC could not have reasonably taken it into account in its earlier dealings.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website