14 December 2006
Customers of Cahoot's online bank who took out a flexible loan with it have been left angry and frustrated this week as the bank gave consumers just two weeks notice of its dramatic APR rises
Interest rates for personal loans rose to 9.4% on December 6th and are due to jump up again to 14.9% on December 19th.
Essentially, the APR has risen by 50% and Cahoot's customers believe that the bank has done this in a deliberate effort to force them to go elsewhere following Cahoot's announcement to withdraw from the lending market.
A spokesman for the company told the BBC that he denied any accusations suggesting that there was an intention to run down the business.
Alan Walters, a professional photographer from Rutland, told This is Money that he could have accepted the move if Cahoot had been honest about its intentions.
"I could accept it if Cahoot was honest and admitted that it doesn't want these customers. Instead it has given me just two weeks to find an alternative lender. I have been quoted 8.5% by Abbey [which owns Cahoot] to switch the loan, but I'm not interested."
Abbey maintains it has done everything within its power to help Cahoot's customers and argued that it was merely bringing up its rates in order to remain competitive with its rivals.
Though the Financial Services Authority cannot hold unsecured loans and the lenders of them to account, the Office of Fair Trading has told the BBC that it would be interested to hear from any consumers who wish to issue a complaint.
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