Changes to Co-op charging structure cause controversy
December 11, 2007
Recent changes to the charging structure used by the self proclaimed ‘ethical’ Co-operative Bank have caused controversy, with many experts stating that the bank’s new structure will adversely affect people on the lowest incomes.
According to reports the way that the charges will be applied under the new structure will result in banking customers getting into debt more quickly, with poorer customers suffering most as the result of the changes to the charging structure.
Although banks were told earlier this year that they could suspend the issue of bank charge refunds until after the High Court test case, which is to take place in January, they were also told by the UK’s financial regulator, the Financial Services Authority, that they could not make any material changes to their bank charges, nor could they raise bank charges applied to customers’ accounts. However, by making the changes to its charging structure, which take effect this months, the Co-operative Bank appears to be in direct violation of these instructions.
Referring to the changes to the charge structure, one official from the Consumer Action Group stated: ‘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.’
Alan Wright
11th December 2007
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