'Ethical' Co-op blasted over bank charges

[EXC]

''The self-proclaimed 'ethical' Co-operative Bank has changed the way it charges for unauthorised overdrafts in a way that will push customers into debt more quickly.''

https://proxify.com/p/011010A0000110...in_page_id=3d7

[Kafka]

Re: 'Ethical' Co-op blasted over bank charges

Link not working - here is the text (well worth a read!)

:merry: from the Co-op to all their customers

http://www.thisismoney.co.uk/saving-...9&in_page_id=7

'Ethical' Co-op blasted over bank charges
Alan O'Sullivan, This is Money
28 November 2007

The self-proclaimed 'ethical' Co-operative Bank has changed the way it charges for unauthorised overdrafts in a way that will push customers into debt more quickly.

Campaigners say people struggling on low incomes will be hit hardest by the changes, which will take effect next month.

The changes appear to be in direct violation of guidelines set down by the City watchdog, the Financial Services Authority, when it ruled banks could temporarily waive any overdraft charge refunds until after the High Court battle between the Office of Fair Trading (OFT) and eight High Street banks early next year.

Under the guidelines, banks were asked in July not to raise their overdraft rates or make 'materially adverse changes' to accounts.

Although the Co-op's unauthorised overdraft fees will remain capped at £100 a month, its approximate 950,000 customers could be forced into racking up the maximum limit over a shorter period of time.

This will mainly hit those on benefits that continually find they run out of cash in the run-up to pay-day and fall into an unauthorised overdraft for a short period of time, according to the Consumer Action Group (CAG). It described the changes as 'insidious'.

Under the terms of the changes, seen by This is Money, the bank has lowered its flat, monthly overdraft charge, while raising the daily charge for overdrafts and lowering the amount of days over which this can be levied.

For example, if a bank customer previously fell into an unauthorised overdraft for three days, they would have been charged £70. However this rises to £80 over three days under the new charging structure. Over four days, they previously would have been charged £85, but now will be charged £100.

In a recent letter to its customers in which the bank highlighted broader changes to its account charges, it stated: 'Please remember you always have the option to close your account if you are not happy with the changes.'

Marc Gander, founder of the Consumer Action Group, said: 'These clever changes will hit those people who are eking out a living day by day and go over their limit just before pay-day. This happens an awful lot for people on benefits and people like young single mums, who run out of money just at the end of the month.

'If you are in a vulnerable group this will happen every month of your life. These changes are likely to break the camel's back for them. The Co-op is just throwing this at them because it knows they have no mobility in their accounts and can't go anywhere else because of their credit rating. This is an insidious charge based on the knowledge that those affected just can't walk away.'

[Amethyst]

Re: 'Ethical' Co-op blasted over bank charges

They were discussed in House of Commons today too. Will add hansard at some point.

[Tools]

Re: 'Ethical' Co-op blasted over bank charges

29 Nov 2007 : Column 415
Bank Charges

2. Mr. Brian Binley (Northampton, South) (Con): What assessment the Government have made of the time taken by the Office of Fair Trading to investigate bank charges. [169064]
The Economic Secretary to the Treasury (Kitty Ussher): The Government have made no such assessment. The OFT began its formal investigation into whether the charges levied by banks breach the unfairness test in the Unfair Terms in Consumer Contracts Regulations 1999 in April 2007. Until recently, there had been no High Court cases on that subject, but it soon became clear that a wider test case was needed to resolve the issue and to provide legal certainty. That process is now under way, and it is initially focused on clarifying whether the regulations apply or not.
Mr. Binley: I thank the Economic Secretary for that full answer, for which I am most appreciative. Millions of families could face additional bank charges, because data files containing their banking details are God knows where. [Hon. Members: “Reading.”] Will the Government assure me that they have spoken to the banks to ensure that, if the loss of data leads to identity fraud that causes accounts to be overdrawn through no fault of the families themselves, the Government will underwrite the resulting charges, ensuring that individuals do not suffer for the deplorable error of Her Majesty’s Revenue and Customs?
Mr. Speaker: Order. I remind the House that the reading of supplementary questions is not desirable.
Kitty Ussher: The Government are, of course, in continual dialogue with the banks, but as the banks have reported to us that there is no evidence of fraudulent activity, I consider the hon. Gentleman’s question to be hypothetical.
Jessica Morden (Newport, East) (Lab): It is a frustrating time for many of my constituents who are caught up in the waiver as they wait for the test case to come to court in January. Will the waiver be revoked if the case does not make progress or if it is delayed?
Kitty Ussher: I understand the frustration faced by my hon. Friend’s constituents and, indeed, the constituents of all hon. Members. However, the decision on the waiver is entirely for the Financial Services Authority, which recently completed a review of it, and concluded that on the whole, although there are some issues to be looked at, the waiver is operating satisfactorily. It is inappropriate for me to say more while a legal case is ongoing.
Adam Price (Carmarthen, East and Dinefwr) (PC): One of the conditions of the waiver was that the banks did not make materially adverse changes to their charges, which is precisely what they are doing. Most recently, the Co-op bank lifted its daily overdraft rate, which particularly affects low-income customers. Because the condition of the waiver is now being breached, surely the Economic Secretary should be calling for the FSA to raise it.

29 Nov 2007 : Column 416
Kitty Ussher: The waiver is a matter for the FSA. As I have said to my hon. Friend the Member for Newport, East (Jessica Morden), the FSA recently completed a review of the waiver consulting both consumer groups and banks. The findings suggest that the waiver is working satisfactorily. If the hon. Gentleman has evidence to the contrary, I would be happy to pass it on to the FSA.

[Amethyst]

Re: 'Ethical' Co-op blasted over bank charges

why thankyou :kiss: