Co-Operative Bank applying interest to Loan in a DMA

JRobbo

My partner has a DMA through Step Change (CCCS as was) which has been in force for over 7 years. One of the debts he had was a loan with the Co-Operative Bank which was over £20,000. First of all they refused to accept the offered payment scheme and continued to apply interest so for every £400 he was paying off, they were adding £360 interest! Now they only accept the arrangement for a year at a time and insist on it being renewed every year and if my partner doesn't contact Step Change to contact them with the new budget and all that, they threaten legal proceedings.

I know that some banks have been called to pay for overcharging interest when people are in financial difficulties, etc. Does anyone think it would be feasible that my partner might have a claim against the Co Op to get them to refund some of the interest they applied since the DMA was first put to them to then reduce the outstanding amount? I'm not holding out much help, but figured it might be worth a try if anyone knew of any precedent for this.

Thanks

Monkeyballs

Hi Robbo,

So Co-op are given £400 pcm and they charge £360 in interest each month? That's worse than if he'd not entered into a DMP isn't it???

12 x 400 = 4800
4800 x 7 = 33600!!!

How long has he got to actually go on this plan as he has already seemingly paid the capital PLUS £13600 in interest!!!

So despite being in financial difficulties and seeking help from a debt charity the Co-op are fleecing him.

I personally would not hesitate to put in a formal complaint to them expressing the difficulties they have put him in and the excessive interest they have charged, and ask for interest and charges to be refunded. If they refuse, you can go to the FOS to take this further but you need to make a complaint to the Co-op first and allow them the opportunity to give a final reply.

MB

Monkeyballs

I just looked on their website at their loan calculator, £20k repaid over 7 years would be £317.30 per month with a representative Apr of 8.9% (£26653.20 in total).

How much are they claiming is still owed? They might as well be loan sharks with this rate of interest...

MB

JRobbo

I don't think he's paying £400 pcm - sorry if I didn't make that clear! I think they are getting just over £100 out of the £460 he's paying into the DMP each month but for the first few years they were still applying charges and interest which equated to £360 for every £400 he paid off. So for about 3 years he only got to pay off about £10 a month off the actual debt and I want to know if we would have a claim now to get them to re-look at that and refund some of the interest and charges applied in those years before they finally relented and accepted the DMP.

sourcrates

JRobbo wrote: »

I don't think he's paying £400 pcm - sorry if I didn't make that clear! I think they are getting just over £100 out of the £460 he's paying into the DMP each month but for the first few years they were still applying charges and interest which equated to £360 for every £400 he paid off. So for about 3 years he only got to pay off about £10 a month off the actual debt and I want to know if we would have a claim now to get them to re-look at that and refund some of the interest and charges applied in those years before they finally relented and accepted the DMP.

Well its a tricky one, he signed up to the contract originally so was legally bound by its terms and conditions, Coop are well within there rights to charge interest as per the original agreement.
The only chance you have of getting anything refunded is to claim they treated him unfairly due to his financial circumstances, its always worth a letter, and if they don't accept this point of view, you will have the option of taking it to the FOS who may have a different view on the matter.
As I said, its always worth a try.