Vancity credit union has abandoned its plan to increase interest charges on lines of credit after months of complaints from furious members.
"We've heard our members, and we agreed that we were not acting in a way consistent with our values," Vancity CEO Tamara Vrooman said Tuesday.
The credit union had sent letters asking members to sign new contracts that would add an extra percentage point to the interest rates it charges on all secured and unsecured lines of credit. The documents would also have allowed further changes to rates in future. If members didn't sign, they would be offered different loan products.
The Province first reported on the issue in May as unhappy members began to receive the letters. At the time, other financial institutions were responding to a historically low prime rate by increasing rates charged on prime-plus loan products.
But while other banks and credit unions were able to raise their interest rates simply by notifying customers, Vancity's loan agreements didn't allow a change in the percentage amount above prime. The credit union had ask members to sign new contracts.
The request was not well received.
"The volume of concern over the fact that increasing the rates required permission to break members' contracts was getting louder," she said. "Our members were sympathetic that we had a need to increase rates but ultimately a deal is a deal and they expected us to honour our contracts."
She said Vancity will cancel any of the new contracts signed by members, the original agreements will be restored, and any additional interest or service charges will be reversed.
The higher rates will be applied to new lines of credit. wmclellan@theprovince.com
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