Cahoot raises its flexible loans rate
Cahoot, the online banking operation of Abbey, has angered its loan customers by raising the interest rate on its flexible loans from 9.4% to 14.9%, a rise of almost 60%. The rise is due to take effect from 19th December.
Observers have commented that the rise in interest rate could cause big problems for people already struggling with their debts. Although flexible loans allow people to pay off what they like each month, and consequently appeal to the self-employed, the interest rate can fluctuate.
Unsecured flexible loans are not covered by the regulator, the Financial Services Authority (FSA), but the Office of Fair Trading (OFT) has requested that any customers who feel the rise is unfair should make contact, outlining their grievance.
In response to the criticism, an Abbey spokesperson said that Cahoot had done nothing to contravene the terms and conditions of its flexible loans and that it was just bringing up its rates to match those of its competitors. It also wants unhappy customers to consider switching to alternative fixed rate loan directly from Abbey.
However, anyone switching from a Cahoot flexible loan to an Abbey fixed rate loan is not guaranteed another product, as even existing Cahoot customers will be credit-checked and possibly refused a fixed rate personal loan UK.