GPs accuse loan provider of 'opportunism' as it drops interest rates
By Gareth Iacobucci
GPs borrowing money from one of the UK's leading finance providers are claiming they face a penalty of thousands of pounds after it emerged that the firm's new customers are being lent cash at more favourable rates interest rates than existing clients.
The details emerged after GPs who hold loans with Aviva at a variable interest rate of 4.25% said they would lose thousands compared to new borrowers after the company dropped its rate to 3.25% for new customers, whilst retaining higher rates for existing customers.
The company, which works with more than half of UK GP surgeries, insisted its rates were ‘competitive' in the current market, but said it was reviewing them.
Dr John Ashcroft, GP in Ilkeston, Derbyshire, said his practice would lose almost £10,000 this year compared to Aviva's new GP customers, and said the higher rate would have a significant impact on the practice.
Dr Ashcroft described the move as ‘opportunist', and said it was unfair for new customers to be offered better terms than existing clients.
He said: ‘We've been looking at re-financing our loan. We will lose about £9,000 a year. We want to invest more in our property, we need a new car park and were also going to invest in our branch surgery. It is extra pressure. When interest rates could be going down, they are not. It is unfair.'
He added: ‘The percentage is small but over time this adds up to lots of money. This is how financial institutions make the money to keep paying their big salaries and bonuses in these financially tight times.'
But a spokeswoman for Aviva defended their rate setting. She said: ‘In common with many other lenders in today's market, Aviva charges interest rates which are competitive whilst taking account of the individual circumstances of each loan application.
The spokeswoman added: ‘Some loans have loadings to our standard variable rate (currently 3.25%) due to the risk characteristics of the loans and there are also a small number where a loading was applied when there was significant volatility in the market and lending rates were generally higher as a result.
‘In the case of the latter, and now that markets have normalised and interest rates have settled down, we are currently in the process of reviewing the position and it is likely that the loading will be removed either in full or in part. Once we have made our decision which we expect will be before the end of the year, we will be writing to all of the borrowers affected advising them of the outcome of the review.'Dr John Ashcroft Expand your practice finance knowledge
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