17 July 2013

Lenders lose bank rates, and get more complaints

Barclaycard has recently changed from tracker to variable rates on one of their credit cards. Complaints to the FOS have risen this year.

Barclaycard is the latest lender to make changes to its rates. Great Britain's largest card issuer has recently changed the rates on credit cards for its Platinum Cardholders. Offering tracker rates on credit cards are unusual and normally only offered on larger loans like mortgages. The card, which used a rate tracking the Bank of England Base rate, has been changed to follow Barclaycard's own variable rate. Barclaycard claim that putting these 10million customers on a variable rate will "simplify” charges across all of its customers. However, changing to a variable rate means that Barclaycard can increase or decrease rates, regardless of the level of the Bank of England Base Rate. Platinum cardholders will change to Barclaycard's variable rate on the 1st of September of this year, customers affected by this will have received a letter from the lender.

The Bank of Ireland UK (BoI) have come under fire recently after they controversially increased the "differential” on their mortgage tracker rate, affecting 13,000 people. This caught the attention of MPs on the cross-party treasury Select Committee, who complained to the Financial Ombudsman Service (FOS). The FOS are currently looking into this charge in order to access whether it was unfair to customers.

Alongside rates going up, there is also fierce competition between lenders, who more and more frequently offer either low on-going rates, which are more manageable long term, or interest-free deals where the is 0% interest for a period and then jump up to high interest.

The Financial Ombudsman Service, part of the Financial Conduct Authority, has received a total of 159,197 complaints during the months of April, May and June this year; a figure which is 179% more than the same period last year.

Mortgages and credit cards received the 3rd and 4th most complaints respectively. This increase in complaints could be related to the Bank of Ireland and Barclaycard's changes which some customers have deemed unfair.

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