HSBC has announced that it is to launch an “annual review” of all customers’ overdrafts to clampdown on customers routinely borrowing over their limit.
Repeat offenders will face having their overdraft limits cut, HSBC announced, in what is said to be a reflection of levels of concern in the industry about unsustainable borrowing.
HSBC reported a 36 per cent increase in bad debt in its half-yearly performance figures, with unrecoverable lending at £361 million for the first half of 2006 alone.
The reviews will “bring greater clarity about what an overdraft service is, how customers apply for an overdraft and how fees are charged,” a HSBC spokesman told the Guardian.
“Increasingly, people are regarding them as an extension of their salary, and in doing so they are at risk of building up high levels of debt and paying too much for their borrowing,” added Joe Garner, head of personal finance services at HSBC.
Some people were now looking at their overdrafts as being similar to a homeowner loan, but secured against their wages rather than their property, he said.
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