Illegal Banking — APR racket
When was the last time you received an email about a change in the interest rate of your banking product? Be it a credit card, current account or a savings account, APR changes seem to be rampant in the banking industry. Do you know how often this happens and is this legal and compliant with consumer protections?
Under the Consumer Rights Act 2015, the as described section reads “The goods supplied must match any description given to you, or any models or samples shown to you at the time of purchase”. This protection applies to the first six months of your ownership of the product. Is this fit for purpose for financial products? In the consumer credit regulation, there is some protections laid out for consumers with good intent but they are lacking significantly on one major point — the fact that a change in APR is synonumous with a change in the product offered. Most accounts obviously ask you to sign a contract clearly specifying that the APR is prone to change at the bank’s discretion — this is predatory if think that the bank passes on the any risk of change in interest rates to the consumer as and when they like through these APR changes. This will be inline with the contract signed and will give you enough notice according to consumer credit regulation but it does not leave the consumer with any options. If the consumer does not like the change in rates, their only option is to close the account and start fresh with another bank or choose a different product — all of which will negatively affect their credit rating. If the banks are free to modify the terms of a deal as often as they like, then the consumer should be allowed the same rights without repurcussions in their credit file.
Using an analogy of buying a television advertised as a good quality standard television with a built in atenna that can receive a 100 channels — Six months after purchase the company says they will reduce the number of channels the television can receive to 40 when there are other televisions in the market that still provide access to 100 channels, what do you do? If the system is set up so that if you go ahead and buy another television, then they will penalise you and progressively not allow you to buy any more televisions, what options would the consumer have?
Banks should only advertise an interest rate that they can support long term and carry the risk of this decision, regulation should block frequent changes to interest rates and consumers should not be penalised on their credit file if they chose to leave the product or the bank for a better product. This is much like American corporate predatorism where corporations influence the policy and regulation and construct a system highly beneficial to them and detrimental to cosumers and society.
