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S Gulliver Esq
Chief Executive 
HSBC Holdings Plc
8 Canada Square
London E14 5HQ

June 2013

Dear Mr Gulliver,

You are the chief executive of a multinational bank and so it must be hard to stay in touch with how your organisation interacts with its customers. As a business owner myself I always appreciate it when I hear from customers directly. It makes me keep in touch with how my business does business. I hope therefore that this letter will be of use to you…

When my business (www.holidaysplease.co.uk) came to HSBC in 2002 we needed funding. We were just starting out and as with most small businesses we needed access to capital to get it off the ground.

Luckily we met a young manager at HSBC Birmingham called Karen. She looked at our business plan and agreed to give us a business overdraft of £60,000 and a loan of £60,000. To show faith in our business Karen agreed that we would only have to personally guarantee half the amount. This was important as we knew it would be easier for the bank to remove fully guaranteed facilities if the climate changed. As we know the banking climate did change and having only half the facility personally guaranteed helped us to resist future pressure from the bank.

I can’t praise HSBC enough for their service in the early days. It helped us build a holiday business that now sells almost £15m of holidays a year, is profitable and has paid off its debts.

However, the reason I am writing is to show you how we have been treated since that date and how our business would have been strangled at birth if we had tried to launch it today. This is what has happened….

As I say, we started with Karen (the superstar) as our manager. After two years she moved elsewhere in the bank. A guy called Tom came along and he was also great. Then after a couple of years he too left and a new person called Andy came in. He was ok, a bit prickly at first but he soon warmed to us and we worked well together. Surprise, surprise he soon he left.

Now when you change managers so frequently it’s a bit like Russian roulette … you are bound to find a bullet in the barrel at some point. So our bullet arrived in the shape of Paul. Paul was very straight laced and admitted that he never would have agreed to the facilities we had. Indeed he did his best to reduce them and tried to make us provide lots of extra guarantees. Luckily, we managed to resist and guess what? After a short while he moved on. 

We now have Steve, our 5th manager in 10 years. Now if we thought Paul’s hands were tied then Steve is in a straight jacket. He says he can’t really do anything and that the bank has really changed. We have actually paid off our overdrafts now and are producing profits of £100,000+. I asked Steve what unsecured overdraft facility we would be allowed in today’s climate. He came back with £3,000! What?? I think the limit on my personal credit cards is about £20,000!

So 10 years ago when we were selling a few hundred thousand pounds worth of holidays a year and losing money you were willing to lend us £120,000 with half unsecured. Now we sell over £10m a year, have paid off our debts, have six figure profits, you are willing to offer an unsecured facility of £3,000???

Do I care? No, not really. We have used the bank for the purpose for which it is intended, to help us get started and grow. We don’t need any funding. So why am I writing this?

It’s so you can try and help the other businesses that have the misfortune of starting a business today rather than 10 years ago. 

If I had tried to launch my business now with the current attitude of banks there is no way we would have got off the ground. We wouldn’t have created the jobs, tax revenues and the service to customers we have over the years. 

Was the amount of money we were lent 10 years ago a bit racy? Perhaps. But that’s not the point. The point is that it has gone far too far the other way. It’s a complete knee jerk reaction to something that wasn’t the fault of business in the first place.

It was the negligent packaging of consumer mortgage products compounded by a Libor scandal which damaged the banking system and produced the credit squeeze. The blame lies at the feet of the banks, not business. We have just been getting on with things, forging on through the headwinds that the banks have created.

So, please can you just go back to the old fashioned way of business banking, it wasn’t broken. To remind you, you had an intelligent human being, who examined the prospects of a business, looked into the whites of the eyes of the management team and decided how much to lend. Simple. It has worked for hundreds of years. It is your local business banking manager, given appropriate authority, who is in the perfect position to decide, not a computer or a nebulous credit committee.

So please can you just go back to the old way of working? If it wasn’t broken, why break it?

Kind regards

Charles Duncombe

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