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10 December 2007
The 'ethical' Co-operative Bank does not appear to be acting very ethically at present. Just weeks after being slated for making changes to its bank charges structure in direct violation of instructions not to make changes from the Financial Services Authority, the bank has now come under fire for making changes to customers' credit card limits without their knowledge.
The widespread effects of the credit crunch have left a lot of lenders struggling, with mortgage companies taking products off the market, a number of lenders suspending the availability of unsecured personal loans, and credit card companies reducing credit limits and rejecting an increased number of applications. However, one customer has expressed outrage at having had his Co-op card limit slashed without even being informed.
The forty five year old city banker, Ian Gladen, said that he used his £9500 limit card to make holiday payments of several thousand pounds. However, his card was rejected, and when he queried this with the bank he was told that his credit limit had been slashed to just £100 above his outstanding balance, which stood at just over £500 at the time. It is also alleged that the bank told him that this credit limit cut had been applied to the whole of the bank's customer base.
Mr Gladen received a letter detailing the credit limit reduction three days after contacting the bank, but he complained to the Co-op, as he believed that it was unethical to change the limit without prior warning, and the Co-op then reinstated his former credit limit. However, Mr Gladen has stated that he will still be taking his business elsewhere, and is outraged over the way that he was treated, despite having an unblemished credit history.
He stated: 'They are trying to back peddle and reduce risk. The best way to do that is to drop everyone's limit and hope that not too many people complain. Many will just say "my credit limit has gone down and that is that". But if you are just willing to kick up a stink, you will probably get your old limit back. I did this by telling them that we had a mutually agreed credit limit and they are not supposed to reduce this without telling me.'
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