The Co-operative Bank – A little less customer led, a little less ethically guided

Alfie_E · 1 November 2005 at 2:00PM

The Co-operative Bank has recently announced a change to the terms of its Cashminder Account. This is the bank’s basic bank account. The announcement is as follows.

The reason we are writing to you is because now it’s even more important than ever to stay in control, as from the 8th of December 2005 you will be charged £19.50 for any ‘unpaid items’. An ‘unpaid item’ is when a Standing Order or Direct Debit is due to be paid, but you don’t have enough money in your account to cover it. If this happens more than once, we may ask you to close your account – so now it really will pay to keep a close check on your account…

The charge is £19.50 for each unpaid item (e.g. 6 unpaid items = 6 charges of £19.50, total £117). You will be notified by letter, of the charge(s), and the date the charge(s) have been applied. You must therefore make sure that you have enough money in your account the working day before the Direct Debit or Standing Order is due to be paid

The bank’s tagline is “Customer led, ethically guided”. This change seems to be neither.

One of the purposes of a basic bank account is to provide banking facilities to those on a low income. Hitting someone on a low income with their example of over one hundred pounds in charges is hardly likely to be in the customer’s interest, especially as they are likely to be hit by charges from the companies who fail to receive the money.

Such high charges are on dubious legal grounding. See The Guardian’s Bank penalties making us see red. Given that the OFT are investigating charging, although currently in relation to credit cards rather than bank accounts, to introduce such a high charge now seems not to be particularly ethical.

And, on a note related to this site, it won’t be possible to write of basic bank accounts, “Although possible, it is not easy to go overdrawn”. For the Cashminder Account, it will be extremely easy. I wonder how many other banks are going to, or already have, introduced such charges to their basic bank accounts.

grumbler · 1 November 2005 at 2:26PM

Alfie_E wrote:

.. is hardly likely to be in the customer’s interest...

Do you believe that 'customer's interest' is the main interest for a bank? Bank is not a charity. I think shareholder's interest is the main.

And, on a note related to this site, it won’t be possible to write of basic bank accounts, “Although possible, it is not easy to go overdrawn”. For the Cashminder Account, it will be extremely easy.

Nobody forces accont holders to use DDs and SOs. These facilities are for those who is able to control their money.

ffs · 1 November 2005 at 2:31PM

I have just received this letter myself.

I will be writing to the The Co-Op head office to complain about this change in terms and conditions because it completely negates the purpose of such an account, and the basis on which it was originally advertised.

I will also be writing to the Banking Codes Standards Board

helpline@bcsb.org.uk

To the Financial Ombudsman Service

complaint.info@financial-ombudsman.org.uk

And to the Office of Fair Trading

enquiries@oft.gsi.gov.uk

I hope other Co-Op Basic Account holders will do the same.

Milarky · 1 November 2005 at 2:33PM

As current accounts represent credit facilities [albeit not always used for this] is the OFT in charge of investigating the used of charges on these too?

My first thought was "no, that's the FSA, surely?" [in which case, God help us all!] but I now suspect that the FSA would do the usual if asked for 'help' by members of the public being poorly served by a financial institution like this and simply say "it's nothing to do with us".

YorkshireBoy · 1 November 2005 at 4:16PM

!!!!!! wrote:

I have just received this letter myself.

I will be writing to the The Co-Op head office to complain about this change in terms and conditions because it completely negates the purpose of such an account, and the basis on which it was originally advertised.

I will also be writing to the Banking Codes Standards Board

Just out of curiosity, which one of the six key commitments of the Banking Code have the Co-op not adhered to?

Banking Code Key Commitments

1. make sure that our advertising and promotional literature is clear and not misleading and that they are given clear information about products and services

2. when they have chosen an account or service, we will give them clear information about how it works, the terms and conditions, and the interest rates which apply

3. we will help them use their account or service by sending regular statements (where appropriate) and we will keep them informed about changes to the interest rates, charges or terms and conditions

4. we will deal quickly and sympathetically with things that go wrong and consider all cases of financial difficulty sympathetically and positively

5. we will treat all their personal information as private and confidential, and operate secure and reliable banking and payment systems

6. we will publicise this Code, have copies available and make sure that our staff are trained to put it into practice

jb478914 · 1 November 2005 at 11:51PM

at least they are letting people know!

it really is quite simple, don't spend money you don't have (via s order, d debit or unpaid cheque) and you won't be charged.

If people cannot do this they deserve to be charged. Why should people who operate their accounts in a responsible manner subsidise the reckless?

frepol · 2 November 2005 at 9:11AM

jb478914 wrote:

Why should people who operate their accounts in a responsible manner subsidise the reckless?

Au contraire, it is the poor and 'reckless' and financially naive who subsidise the responsible. Why do you think the charges are so high? It subsidises your free banking.

Fran · 2 November 2005 at 9:46AM

jb478914 wrote:

at least they are letting people know!

it really is quite simple, don't spend money you don't have (via s order, d debit or unpaid cheque) and you won't be charged.

If people cannot do this they deserve to be charged. Why should people who operate their accounts in a responsible manner subsidise the reckless?

That's easy to say, but if you are in a position where you have a low income you can easily drop below 0 even by a few pence and be charged these outrageous amounts which make your situation even worse.

I opened an Alliance & Leicester deposit account a few years ago because I didn't want to be able to overdraw or checking every penny in my account every time I made a transaction. Suddenly I got a charge of £25 added to my statement! Apparently they had changed my account to a current one (which I didn't want). They might well have written to me at the time, but the letter couldn't have been plain and clear or I would have been questioning it. These charges are going to always hit people with a low income the most.

pin · 2 November 2005 at 10:06AM

I guess the argument goes, if you don't like the charges, or anything else about Co-op, no-one is asking you to stay. You are more than entitled to move your money elsewhere.

ffs · 14 November 2005 at 8:02AM

YorkshireBoy wrote:

Just out of curiosity, which one of the six key commitments of the Banking Code have the Co-op not adhered to?

1 - make sure that our advertising and promotional literature is clear and not misleading and that they are given clear information about products and services

The Cashminder was marketed as a Basic Bank Account. The key features of basic bank accounts are set out here on the British Bankers Association website:

http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=135&a=632

Please note the line: "They do not have an overdraft facility and so there is no danger of running up debts and charges."

YorkshireBoy · 14 November 2005 at 10:06AM

!!!!!! wrote:

1 - make sure that our advertising and promotional literature is clear and not misleading and that they are given clear information about products and services

The Cashminder was marketed as a Basic Bank Account. The key features of basic bank accounts are set out here on the British Bankers Association website:

http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=135&a=632

Please note the line: "They do not have an overdraft facility and so there is no danger of running up debts and charges."

I think they've followed the Banking Code. They will reserve the right (in their T&C's) to modify account conditions subject to adequate notice (which they've obviously given). Their statement about the £19.50 charge seems very clear in the letter posted, and as such complies with the second commitment. A basic bank account stops you spending money you haven't got. It doesn't, however, stop you "committing" to spend money you haven't got when you don't ensure you have cleared funds available to meet the direct debits that you have set up.

There is "no danger of running up debts and charges" because they have said that they may ask you to close the account on the second such instance, thereby limiting your charges to £39.

Also, if you decide to close this account you ought to think very carefully about where else you can go. This is because the FSA has a table of basic bank accounts (accessed from your own link above) and the new Co-op charges cannot be beaten unless you are prepared to give up the debit card and go with Barclays and their £15 charge for the same "offence".

From the "Financial Services Authority, Basic bank accounts – your questions answered" publication...

"What if there isn’t enough in my account to pay my bills?
If you pay your bills by direct debit and there isn’t enough money in your account, the bank will not make the payment. Most banks will charge you if they have to refuse a direct debit – see the table on pages 6-7. Some banks may close a basic bank account, instead of making a charge, if they have to refuse a direct debit.

If you pay bills by standing order and there isn’t enough money in your account, the bank will not make the payment, and they may charge you in this case.

You will still have to pay the bill, as well as any charge, so make sure you have enough money in your account to pay your bills."

http://www.fsa.gov.uk/consumer/pdfs/bank_account.pdf

The Co-operative Bank – A little less customer led, a little less ethically guided

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