First Direct / HSBC Current Accounts and Missed Payments

[tga1988]

Hi all,

Like some other people here, I have had a missed payment recorded on my credit file for 'bouncing' a direct debit. This data was recorded at Experian and Equifax as a [1] missed payment marker. Additionally, Equifax marked the account as "In Arrears". To be clear, I was not "In Arrears", nor had I missed any contractual payments with First Direct.

As you might appreciate, I am not happy with First Direct in doing this. I wrote them a letter of complaint, requesting that they amend my credit file. They refused, on the grounds that they had the right to do this as the credit agencies allow for the reporting of bounced payments on current account entries. I escalated the complaint to the Financial Ombudsman Service, who (surprise, surprise) sided with First Direct, stating that the bank had a right to do this.

I am wondering if there is any legal action I can take against First Direct? And would it be worthwhile? I want to fight this, but if this means paying out £xx,xxx in solicitors with little hope of success, then I will have to be realistic.

Hopefully, this will be of some use to other people who have experienced this behaviour from First Direct, and perhaps could be the start of a legal precedent to get these markers removed for other people who have been affected by them.

My grounds for this is as follows:
* I appreciate First Direct are able to record returned payments on a credit file, however, these are shown as "Missed Payments" (and in the case of Equifax, "In Arrears"). This is factually false information that they have refused to correct. Organisations are bound by many laws (e.g. Data Protection / GDPR and Libel) to only report detrimental information if it is factually accurate.
* Equifax confirmed that a [1] indicator only refers to a missed contractual payment. However, First Direct still marked my Equifax record. This is different to Experian, who do state (in the small print) that a [1] can refer to a bounced direct debit.
* I am fairly sure they do not do this to all their customers. When I opened my account in 2014, I went over my overdraft limit frequently and they did not report it to any agency. I have no hard evidence for this, but I assume that they only do this to customers they have 'flagged' or otherwise do not like. This is just mainly from the lack of posts of complaint about this practice, which should have affected a lot of people if it was applied consistently.

Other potentially relevant information.
* I complained to Call Credit (as well as Experian and Equifax), and interestingly my First Direct account was instantly removed from my callcredit report.
* It seems from other posts online that no other bank does this. Also, it appears that First Direct/HSBC have been doing this for some time (at least 8 years).

Thanks in advance.

[Shotley]

Hi

From my own experience, complaining to the CRA's about erroneous records or information is a pointless exercise. I'm not saying this to dishearten you, just give you an idea of what you're dealing with so I'll give you a breakdown of what I went through.

My issue came from the fact that Eon had been incorrectly estimating my usage and unbeknownst to me were estimating bills for nearly 2.5 years! During this period, they lowered my DD payments on several occasions; they chose to do this it was never at my request. I eventually got a letter through the post from them telling me that I owed them nearly £2000 because they hadn't actually been looking at my meter. Of course, I was unable to pay them such a hefty figure in one shot so after a few months of arguing and getting nowhere I arranged to up my DD amount to pay off the arrears. All good...or so I thought.

Last year, I signed up for the Experian and Equifax services; I was in the process of getting a mortgage so needed to know exactly where I stood. I knew I had defaults but my payment history for the previous 4 years on active accounts and that was reflected on the Experian file. On Equifax it was entirely different story. There was a big red marker added saying that I hadn't been paying recent bills for over 20 months; I didn't even know that Eon reported accounts to Equifax. Looking at the account history in detail, they'd filled up my records with lots of red 6 markers which in credit file terms are as bad as a default!

I asked Eon for an explanation and they told me that my payment history had nothing to do with it. They acknowledged that I had made all payments they'd requested on time and that the arrears accrued because of their own error but they insisted they were reporting accurately that I had 6 months of arrears. This is despite the fact that Equifax list this area as 'missed payments'.

So, the next port of call was Equifax. They confirmed to me that the record should reflect payments made to the account, not the outstanding balance. I raised a complaint and they sent it to Eon for clarification. Two weeks later, I get an email from Experian saying that Eon state the account record is correct and they won't do anything about it. Tough luck!

Here is the issue: The CRA's don't actually care whether the record is correct or not. They don't investigate it at all. They may put a mark on that it is in dispute but that's it. In my case, even though they were given the relevant facts by me and they confirmed that they shouldn't register missing payments, they only ask the company entering the record whether it is correct. They don't ask for any explanations or ask any further questions. So basically, anyone who puts a dodgy record on your file can simply tell them it's right without having the need to prove the issue; the CRA just takes their response as gospel.

I complained to the energy ombudsman and the financial ombudsman, got nowhere even with emails from Eon accepting that the accrual of arrears was down to them, not me!!

In short, the problem you have is that you are fighting an uphill battle against two very large organisations who have apparently airtight T&C's that you agree to when you sign up with them.

You could still go see a solicitor to seek advice, but the cost would probably be quite high to fight it. The important question to ask yourself is, is it worth it? What's the rest of your credit file like? Is that the only blot on your file? If it is, it'll remedy itself very quickly if you keep the payments going. If it isn't, if there are other late payments or defaults, getting that one record altered isn't really going to make an impact.

Whatever you do, good luck!