Co-op bank insist I need to keep current account to repay loan

[lsmcal1984]

Hello,I’m new to this forum and I’ve been at my wits end with the Co-op bank and a £9,600 loan I took out in last year. In short, I have chosen to move banks and they insist that I maintain a current account with them.

 

 

Back in January 2010, I signed an agreement and the money was put into my bank account. I had a Privilege Account at £12 per month. At the same time, I paid back an overdraft of £1800 at £80 per month (this was completed in August this year). I had debt problems in the past due to a CCJ and default on my credit files and I have spent time rebuilding my history for when these drop off in 2012.

 

 

Whilst planning my expenditure this year, I chose to downgrade to a fee-free Current Plus Account with a £200 overdraft to save £144 per year. The bank denied this so I chose to downgrade to a Standard Current Account with no overdraft. I pushed the bank to explain why I was given such a large loan and overdraft but was not allowed to maintain a £200 overdraft, even though I’d never missed any payments whatsoever. I never got a full response apart from “a marker on your credit file means that we can’t give you any further lending” (because of the adverse history).

 

 

Since that time, I have switched banks and use Metro Bank as my main account (as I live in London and it’s open every day). They gave me a current account with a small overdraft. I asked the co-op to give payment details to me for the loan so that I can pay them from my new account and they said “you have to keep a current account with us”.

 

 

I then tried to change the payment date of the loan: it is paid on the last working day of each month, which is the same day as when I get paid. They told me this isn’t possible and that I should send payments from my bank to theirs. However, when I explained that the Faster Payments Service is not guaranteed (the website says it arrives same day 95% of the time), they had nothing to say.

 

 

I expressed my concern that I was worried about damaging my credit rating because of late payments (and since the default in 2006 I have been working to improve) and incurring bank charges, but they suggested that I “get ahead of payments instead as to not miss a due payment”.

 

 

My complaint was followed up with a letter saying that “I could take out a new loan agreement to change the payment date” but I’d need to borrow “£2000 more”. When I asked about this, I was told that I’d fail the credit check to get the loan so it wasn’t an option.

 

 

I have since reported this to the Financial Ombudsman but I’m not expecting anything good to come out of it.Frankly, it’s ridiculous. I want to pay the loan just from a different bank and still on time. There is nothing in any of their loan agreement that says I have to maintain a current account with them. One section just says that payments must be made on time.

 

 

I am trying to preserve the work I have done on my credit history and to improve it; I understand that keeping my old current account can be good for this - shame the bank has become so shoddy in the last year or so. However, as there is no money going into the account, I am worried that should the Faster Payments system not deliver on the same day, I will have to explain why payments are missed and fix reports made to my credit files.

 

 

To be honest, it’s started to wear me down and want to ditch the loan agreement because they are imposing unfair terms. I know this is unlikely but it’s started to drive me mad. I’m trying to pay them properly and they’re being idiots about it!

 

 

Has anybody else experienced something similar? I’d be interested to know how it got sorted out and any pointers are very much welcomed.

 

 

Many thanks and I’m sorry if I bored anyone reading this(!)

Edited October 27, 2011 by citizenB
reformatted for easier reading

[citizenB]

I would say that you do NOT have to maintain an account with them in order to service your loan, but I will find out for sure.

 

If they are unwilling or unable to change the date of the payment in order to help you over this difficult time, then I would say that they are Treating you unfairly.

 

You should raise an official complaint with them in the first instance. Explain that due to the way your salary is paid into your account you unable to pay on the stated date and that you would like it moved to (whenever is most convenient for you).

 

If this doesnt work, then I would suggest you make a complaint to the Ombudsman.

 

BRB

[citizenB]

IMHO they are insisting that you maintain the account for two reasons.. one that they can add charges to the account if they make the payment from it and there are insufficient funds and 2nd .. just to be bloody minded.

[Mr lex]

I am with CitBe on this. I had the same problem with HSBC insisting that my son kept his account open with them to service a loan he had.

When you write to them quote the DD grantee and also 'Unfair Competition'

 

You can change the date a DD is payed to suit your circumstances.

 

What you could do is set up a standing order from your Metro account to be paid into your Co-Op account in time to cover your your DD and the monthly fee for keeping the account open, this will buy you some time to sort it out.

 

In fact, you could pay the loan back by standing order from any account you like. However this would get messy, with them putting charges on and you having to fight to get them back.

 

As CitBe says, if you don't get any satisfaction, a complaint to FOS is called for.

 

Lex

[dx100uk]

you must have a statement for the agreement for the loan

the details are there on the sort/account number to use to pay it from another account

all agreements must have this in them.

 

dx

[citizenB]

This is typical of the Co-op, they use to have values, they told me that they were moving me from one type of Credit Card to another, so would close the existing one, but they left it open so I had two Credit Cards, an increase in credit. This is to do with their internal sales targets.

 

Best thing to do is a Letter of Complaint to:-

 

Barry Tootell, Chief Executive

barry.tootell@cfs.coop

 

 

Some more advice

[BankFodder]

I have sent you an email. Would you mind responding by email on our admin address.

 

Thanks