Co-op blasted over bank charges
The Co-operative Bank has altered the way in which it charges for unauthorised overdrafts. Campaigners say those struggling on low incomes will be affected most by the changes, which are due to implemented in December. The move has been criticised and said it will push customers into debt more quickly.
The changes seem to be in breach of guidelines agreed by the Financial Services Authority (FSA) when it ruled banks could waive any overdraft charge refunds until after the High Court battle between the Office of Fair Trading (OFT) and eight High Street banks in January 2008.
In July, banks were requested not to increase their overdraft rates or make ‘materially adverse changes’ to accounts. The self-proclaimed ‘ethical’ Co-operative Bank’s unauthorised overdraft fees will remain capped at £100 a month, however, its 950,000 customers could be forced into racking up the maximum limit over a shorter period of time.
According to the Consumer Action Group (CAG), this will primarily affect those people who are eking out a living day-by-day and find they run out of money in the run-up to pay-day and fall into an unauthorised overdraft for a short period of time. The group described the changes as ‘insidious’.
Under the new charges, if a customer of the Co-op previously fell into an unauthorised overdraft for 3 days, they would have been charged £70. However, this increases to £80 over 3 days under the new charging structure. Over 4 days, they previously would have been charged £85, but now will be charged £100.
A spokesperson for the FSA declined to comment on the Co-op but said it would be monitoring them over the next few weeks.