Money News
The power of social networking has been graphically demonstrated by the climbdown by HSBC over its decision to scrap interest-free overdrafts for graduates. A 'virtual' protest, "Stop the Great HSBC Graduate Rip-Off", organised by the National Union of Students on the Facebook website, calling on students and graduates to boycott HSBC, had attracted nearly 5,000 people.
The row began after HSBC wrote to students in July saying it would begin charging interest of 9.9% on overdrafts of up to £1,500 for people who graduated this year. Previously the bank had offered free overdraft facilities to new graduates to help them repay student debt. HSBC revoked this facility with 30 days notice.
The key point is that not only was the bank planning to withdraw the free overdraft for new account holders but it was cancelling the facility for existing account holders as well. Legally HSBC is completely within its rights to do this. Financial institutions are at liberty to vary their terms and conditions of business providing they give customers notice.
However, it is surprising that nobody at HSBC appears to have thought about the impact of the negative publicity such a move would generate before implementing it. The decision would have cost a graduate who had the maximum interest-free overdraft of £1,500 nearly £12 a month, or more than £142 a year.
In the wake of the protest HSBC has backtracked, saying it will be refunding any overdraft interest it charged people during August. Andy Ripley, HSBC's head of product development, said, "Like any service-orientated business we are not too big to listen to the needs of our customers.
"Following the feedback from our graduate account holders, both directly and via the National Union of Students, we have taken the decision to freeze interest charging on 2007 graduates' overdrafts up to £1,500 and refund any interest charged in August.
"We are also pleased that we will be working with the NUS to enhance our new account offer so that it fully reflects the needs of recent graduates."
The NUS Facebook protest would have been particularly excruciating for HSBC coming at prime account opening time for new student customers. Despite HSBCs policy reversal it seems likely that they will be attracting fewer undergraduates this year!
31 August 2007 © Moneyextra.com
Moneyextra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.