James Daley: A little detail with big implications
Saturday 12 January 2008
No sooner had I finished writing about the bad practice amongst most of Britain's banks last week, than I came across yet another piece of trickery that I feel is worth sharing with you.
About a year ago, HSBC introduced something called its "Fair Fees Policy" – a seemingly transparent system, which ensured customers would not be penalised for accidentally busting their overdraft limit, as long as they didn't do it more than once every six months.
Under this policy, overdraft requests are deemed to be either formal (whereby you ask for a new overdraft, or an increase in your limit) or informal (where you bust your agreed limit accidentally).
Every customer is allowed one free overdraft request – formal or informal – every six months. Beyond that, however, you are charged at £25 a go.
I was a big supporter of this policy because, firstly, it gave customers a bit of leeway for accidental error and, secondly, it was easy to understand. Most importantly, it treated customers fairly.
What most people – including myself – failed to spot in the small print of the Fair Fees Policy, however, was that under this new system, customers would also be subject to an annual overdraft review – which, conveniently for the bank, would count as a formal overdraft request.
Therefore, any customer that now goes overdrawn within six months of their "review" will get fined – regardless of whether they've made another formal or informal overdraft request in the near past.
I've had the same size overdraft with HSBC for almost 10 years, and have never had, or felt the need, for an "annual review". Ultimately, I know that if my bank believes I have deteriorated as a credit risk, they will try to rein in my limit. They have computer systems in place which automatically highlight customers who are sailing a bit close to the wind – and these render any kind of annual review pointless.
I'd bet the interest on my HSBC current account (not very much, admittedly) that these "annual reviews" don't actually exist. For customers like me, whose affairs are in relatively good order, the "review" will simply involve dispatching an automated letter, informing me that I'm allowed to keep my current overdraft limit. After all, why would the bank wait until the annual review to rein in a customer who was becoming a dangerous credit risk?
From the bank's perspective, annual reviews are simply the perfect excuse to mark an overdraft request on your file – so that if you slip up over the next six months, you'll have to pay them their £25 charge.
A spokesman from the bank reassured me that customers are only in danger during the first six months after their review. The good news is that if you bust your limit in the following six months, you'll be back to zero on your overdraft request tally.
This only makes the whole policy even more perverse: bust your overdraft limit between January and June and you'll be charged, but bust it between July and December and you won't. Why not introduce fines for customers who use their debit cards on Tuesdays in April? It would make as much sense.
Talking of scams, I've found myself targeted by another crafty little trick over the past few weeks. If you get a missed call from an unrecognised number on your phone – are you one of those people who can't resist calling it back? Don't!
I've had a series of missed calls in recent weeks from numbers beginning 070, which look like regular mobile numbers. In fact, these are personal forwarding numbers and can cost several pounds a minute to call back from a mobile. Fraudsters have been deliberating calling random mobile numbers from these services, and then quickly hanging up, hoping they'll get a call back.
If you don't recognise the number on a missed call, forget it. If it was something important, surely they would have left a message.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Top Gear presenter is no stranger to foot-in-mouth controversy
Review: Mike Leigh's biopic is a rambling, rich character study
Want to ward off (or welcome) trick-or-treaters? Here's how
10 tips for taking out a personal loan
Santander's new current account is not quite as easy as 1, 2, 3
Weekly Money: Round-up of the personal finance stories you may have missed 13-17 October
Bank-beating exchange rates on your international payments
How shops make you spend: The subtle art of the savvy retailer revealed
- 1 'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
- 2 Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
- 3 Topshop at centre of row over body image as 'shocking' skinny mannequin photo goes viral
- 4 If you think Russell Brand’s new book is confused, you should read what his critics have to say about it
- 5 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Pope Francis declares evolution and Big Bang theory are real and God is not 'a magician with a magic wand'
Huge surge in Ukip support after EU funding row, according to new poll
Ukip ‘exploiting grooming scandal’ to secure party’s first police chief
Nigel Farage: 'There’s nothing wrong with white people blacking up'
Maureen Lipman says 'she can't vote Labour while Ed Miliband is leader'
Muslims, immigration and teenage pregnancy: British people are ignorant about almost everything
iJobs Money & Business
£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...
£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...
£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
Day In a Page
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000