James Daley: Graduates' lesson is to ditch HSBC

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Stories of customers being ripped off by the bad old banks have been all too common in recent times, but it's been really disappointing to see my own bank – HSBC – turn into one of the worst culprits over the past few months.

Once upon a time, in the not too distant past, HSBC could boast of one of the best records on customer service, receiving a much smaller number of complaints, relative to its size, than most of its competitors in the high street.

Over the last couple of years, however, the management appears to have switched priorities, happily putting clients' noses out of joint in search of a few extra pounds of profit.

It all began last year when the group shocked customers of its internet bank, First Direct, by introducing a monthly fee for the least well-off among them. The policy naturally had the desired effect, scaring off most of its least profitable customers and stealing the cash of those who stayed behind.

This summer, the bank has gone one step further, hitting another group of vulnerable customers – new graduates – by withdrawing the interest-free overdraft facility on the HSBC graduate account. Worse still, it has given new graduates just a few weeks' notice – after which they will start being charged interest at 10 per cent.

Both of these money-grabbing ploys were naive in terms of public relations. Introducing a fee designed to weed out its poorest clients left it looking pretty callous. Nevertheless, from a commercial perspective at least, it was a relatively savvy move.

In the case of its graduate accounts, however, the bank has made a gross misjudgement. Already, thousands of those affected have signed up to protest groups on Facebook, and most are planning to vote for the changes with their feet. While these are customers who may be loss-making now, they are also tomorrow's doctors and lawyers, who will one day be very lucrative clients for their banks.

Furthermore, as the news of HSBC's new hard line spreads, it only leaves a sour taste in the mouth of its longer-standing customers, such as me.

What made me most angry was reading how the bank patronised its graduate customers in the letter it sent to them last month. Instead of simply announcing the new charges, the bank had the cheek to insinuate that it was in their best interests – as it would help them understand that there was a price to be paid for borrowing money.

Its old policy – where interest-free overdrafts were phased out over a few years after graduating – was a much friendlier way of teaching new graduates the very same message. In my case, HSBC still made some money out of me along the way – it took me several years to get used to keeping in the black and out of the interest-bearing part of my overdraft. But I did learn my lesson, and at least I held on to the interest-free facility at the time I most needed it – during my first year of work.

The sad fact is that (as HSBC knows full well) a large number of new graduates won't have opened the letter that tells them about the change in policy. When they opened their accounts three years ago, they were told in person that they would get to keep an interest-free overdraft for several years after graduation and, quite understandably, that's what they are expecting to happen. It may be several months before they discover that they are being charged.

At a time when students are leaving university with more debt than ever before, it is an incredibly cynical move. I would urge graduates to switch away from HSBC as quick as they can.


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