Coop overcharging couple interest on loan is ‘scandalous, illegal act’

In a “scandalous and extremely illegal act”, the former Cooperative (Coop) bank overcharged a private loan by €28,686.96 in interest rates, financial ombudsman Pavlos Ioannou said on Monday.

Ioannou said his office carried out an investigation after two people filed a complaint with him that their loan was being illegally overcharged with interest and other expenses.

The two obtained a loan of 40,000 Cyprus pounds, corresponding to €68,344 from the former Coop in Maroni.

According to Ioannou, the bank had initially implemented the correct interest rate.

However, this was followed by a change in both the base and margin interest rates “which has not been deemed legal because there was not enough evidence showing the individuals were informed of the increase in interest rate.”

On September 21, 2017, the bank returned the margin interest rate to the legal level, without correcting the previous error.

Taking into account the overcharged rates, the loan was effectively paid off in 2018, the ombudsman noted.

“It is unthinkable for a loan that has been legally paid off since December 10, 2018, that interest payments are still required from the borrowers to this day,” Ioannou said.

After the Coop’s demise, the loan was transferred to the Hellenic Bank. The ombudsman noted Hellenic Bank bears no responsibility for the charges however it must return the amount to the couple in full.

They were charged interest up until the end of 2021.

The bank is also required to fully settle the bank loan, relieve guarantors from their responsibilities and nullify any mortgage.

Ioannou shared the letter with Hellenic Bank, the house president, finance minister, chairman of the house finance committee and director of Kedipes.