HSBC to come under pressure over interest

HSBC is expected to come under pressure to pay interest on remittances it delays crediting to accounts following a ruling against the giant bank.

The Consumer Council said it was likely to investigate procedures and international practices for settling transfers between bank accounts in the wake of the Small Claims Tribunal victory for a businessman.

The tribunal on Monday ordered HSBC to pay $3,324 interest to Xu Xiao-feng for delays in crediting two transfers worth US$1.8 million (HK$13.95 million) and US$1.33 million from the New York branch of a bank to his account. Mr Xu was also awarded $2,000 in costs.

The tribunal agreed with his argument that he was denied a day's interest because of the delay. HSBC had said overseas remittances had 'queued' up in its system and it was difficult to credit a customer's account immediately.

A Consumer Council spokesman, Kenneth So Wai-sang, said it would consider studying the way remittances were handled at other banks in Hong Kong and internationally.

'Then we can make a proposal to settle the matter,' he said.

'Disclosure of information is important so customers can shop around for the best services for their banking needs.' KPMG partner Paul Kennedy said the ruling would make consumers more aware of their entitlements.

'It will prompt people to look at it and question whether they are getting the correct amount of interest,' he said.

HSBC was reluctant to discuss the issue yesterday. Spokesman Gareth Hewett said it was studying the decision and was unable to say how many remittances it conducted every day.

It charges account holders US$5 (HK$38.85) to receive remittances in US dollars and HK$125 for those sent overseas in the morning and HK$175 in the afternoon.

Competitor Standard Chartered apparently adopts a different policy on crediting interest to remittances its system delays.

During the hearing, Mr Xu presented Standard Chartered Bank statements showing it credited interest from the transmission date and not when credit entries were made to his account.

A banker at a clearance bank, which transfers massive amounts between financial institutions, said he believed interest was generally paid to customers as soon as the money should have arrived in their accounts.

At the wholesale banking level, the huge sums involved were never held up, he said. 'There is no way we can delay or we would lose millions,' said the banker.