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HSBC has agreed to compensate thousands of shoppers who bought goods on credit, but were overcharged when they fell behind with payments. In total £4m will go to 6,700 customers who were charged an “unreasonable” amount between 2003 and 2009.

The finance was provided by two firms, HFC and John Lewis Financial Services, who are now both owned by HSBC.

The Financial Conduct Authority (FCA) said only a small number were actually customers of John Lewis. Others bought goods at a wide variety of retailers.

When these customers fell behind with payments, they were charged 16.4% of their outstanding balances as a debt collection fee.

The Office of Fair Trading (OFT) decided that such a charge was unreasonable back in 2010.

However, since then the FCA has calculated how many people are due compensation. On average they will receive about £600 each. Customers affected will be contacted by HSBC directly.

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