Co-op fights for new bank customers

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File photo dated 07/08/13 of a Co-operative Bank branch sign as the bank has launched a new fight to win back customers and re-build its ethical reputation with a ?125 current account switching offer which includes a donation to charity. PRESS ASSOCIATION Photo. Issue date: Tuesday February 4, 2014. Customers who switch their current account to the Co-op will get ?100 and they will also be able to donate a further ?25 to one of seven charities, including Action Aid, Oxfam, Water Aid and Amnesty International. See PA story MONEY Coop. Photo credit should read: John Stillwell/PA Wire

The Co-operative Bank has launched a new fight to win back customers and re-build its ethical reputation with a £125 current account switching offer which includes a donation to charity.

Customers who switch their current account to the Co-op will get £100 and they will also be able to donate a further £25 to one of seven charities, including Action Aid, Oxfam, Water Aid and Amnesty International.

Last autumn, the Co-op admitted it was shedding current account customers as its reputation took a battering following financial turmoil and the drugs scandal involving former chairman Paul Flowers.

It said previously that possible "brand and reputational damage" stemming from its woes, combined with a new industry-wide guarantee introduced last September to make it easier for consumers to change their bank or building society, "may be a contributing factor to an increase the bank has seen in the switching out of current accounts".

Steve Britain, commercial director at the Co-operative Bank, said today: "We know we have a lot to do to restore trust in our business but with our capital position strengthened, we are able to begin to talk to customers again about the products and services we can offer them."

The Co-op has around 1.6 million current account customers. New customers who open a Co-op standard current account, current account plus or smile current account and credit £800 into it within 31 days will qualify for the offer. Some existing current account customers are also eligible, if they do not already put £800 each month in their account.

Those who switch will get £100 paid into their account within 45 days of the change being completed and they will also receive information on how to choose which charity they want the £25 donation to go to.
The other charities they can choose from are the Carers Trust, Help the Hospices and the Woodland Trust.

Current account customers also get access to preferential rates on other Co-op products, such as an Isa with a fixed rate of up to 2.2% and a personal loan rate from 5.5% on loans between £7,500 and £14,950.

The Co-op, whose image has traditionally attracted organisations including trade unions and charities, still faces a raft of inquiries into what went wrong at the bank.

A rescue plan to plug a £1.5 billion black hole in the Co-operative Bank's finances was approved in December, clearing the way for bondholders, including US hedge funds, to be given 70% of the business.
The Co-operative Bank is now 30%-owned by the Co-operative Group.

The Co-op said that more initiatives are in the pipeline for the coming months to make sure that existing customers get access to its best offers.

As the Co-op has been focusing its efforts on sorting out its crises in recent months rather than going on publicity drives, it has watched as other current account providers have stepped up the battle to win new custom with a string of new perks and high-profile advertising campaigns, following the launch of an
industry guarantee for people looking to switch their provider.

The guarantee cuts the length of time it takes to switch current accounts from up to 30 working days previously to just seven and automatically transfers outgoing and incoming payments over to the new account.

Recent figures from across the industry show that more than 300,000 people switched their current account provider in the first three months of the guarantee.

First Direct and Halifax both currently offer customers £100 to switch to them and last October Lloyds Bank launched a new cashback scheme which sees 1,000 current account customers picked at random every week having the cost of a purchase of up to £500 refunded.

Charlotte Nelson, a spokeswoman for Moneyfacts, said: "Whilst the Co-op has had a few troubled months, they are fighting back and offering customers a £100 switching incentive. By giving an extra £25 to a charity of the customer's choice, they are once again setting themselves apart from the banks."

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