Debt written off after bank ‘imprisons’ customer

July 9th, 2011

In one of the more bizarre financial stories of recent weeks, HSBC bank has been forced to write off a customer’s overdraft after a judge decided it had harassed her with hundreds of phone calls and then unlawfully imprisoned.

The lady won her civil case against the bank at Swindon County Court when the judge ruled that the overdraft of £2,070 should be cancelled as HSBC had failed to meet its contractual obligations to her. The disputed clause was that the bank should run customer accounts with “reasonable care and skill”.

The customer had gone to her local branch of HSBC in October 2008 to complain about the overdraft fees it had been levying on her account. When she became upset and wanted to leave the interview room, which had been locked from the inside for privacy, the branch manager stood up and blocked her way.

According to the judge, that behaviour crossed the threshold to the level of unlawful imprisonment. However, leading up to that incident there had also been sustained telephone harassment.

Between 2008 and 2009 HSBC called the customer hundreds of times many calls were generated by automatic dialling equipment and were silent while on other occasions members of staff threatened the lady and said that the phone calls would continue until she paid off the overdraft.

The telephone calls continued for a year even after HSBC promised they would stop as a result of a first complaint against the company. The calls eventually only stopped when the customer began legal proceedings against the bank.

Additional complaints against the bank noted that they did not freeze the account when asked to do so, allowing further payments to make it even more indebted. Aditionally, HSBC failed to tell the customer when she opened the account what the overdraft fees would be, which was a direct breach of contract.

HSBC said it was sorry for the stress it had caused the customer and expressed regret for the way it had treated her and her difficult financial situation. While not all the complaints against the bank were upheld, the judge noted that the bank had control of the phone calls and could have made them stop at any time, in particular after it indicated that it would do exactly that.

The judge ordered that the customer’s overdraft be cancelled and indicated that, had the customer applied for damages, she would have been awarded an extra £1,500.

The campaign website penaltycharges.co.uk, which helped the customer in this case, said: “We need legislation to stop unlawful bank charges, as all parties promised before the last election. Harassment of customers in difficulty seems to be routine for many financial institutions and regulators seem to take very little notice.”

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