Thread: ombudsman's award of 8% on top of PPI

Has anybody got any ideas or experience of this?

I have been having an argument with my bank, Lloyds, about building insurance premiums which they have been taking since 2006 on a policy which was cancelled. (This shows my disorganisation and I only recently noticed the direct debit which was going out).

After a complaint and an argument they have finally agreed to refund me my premiums. I then pointed out that they would have to include a figure for compensation. They offered 8% -- £105 interest on a refund of £1300 -- about 8%.

Now I had always thought that the 8% which was awarded by the Ombudsman was calculated in the same way that a county court would calculate section 69 interest. However Lloyds offer is simply a straight 8% of the final figure. If it was calculated on the basis of a section 69 award, it would have been closer to £200.

I am challenging this with them and I have already told them that this is not acceptable. But I am now curious to know whether the famed 8% which is being awarded by the ombudsman is calculated on a section 69 basis or is calculated simply as a straight 8% on the final refund.

Does anyone know? I think that this is a very important point. If the ombudsman awards of interest do not reflect the length of time for which the banks have unfairly held their customers money then the customers are suffering extreme injustice. It is also another extremely strong argument against people going to the ombudsman for bank charges or PPI complaints. If this is the basis of ombudsman awards of interest, then I can imagine that when the FSA bank charges repayment scheme is announced, that the 8% which is likely to be payable along with charges refunds will also be awarded as a flat 8% on the total figure.

Can anyone help here?

I didnt realise that the Ombudsman were prepared to add 8% to claims. For my bank charges claim through the ombudsman I'm simply claiming the charges back plus the interest on the charges. This could be worth quite a sum for me as the claim is for about £7k. We only need to win the appeal and I'm even more quids in ....

This was provided by moderator: car2403

how we use 'interest' to calculate financial awards - issue 33 Nov 2003

Quote:
In many types of cases, we intend to continue calculating redress in exactly the same way as now. In particular, we consider it appropriate, in many cases, to continue to follow the procedure adopted by many courts – and to award simple interest on the award made, at the rate of 8% per year from the date, in our view, when the firm’s actions caused the problem until the date when payment is made (or, for most insurance claims, from the date of the incident until the date when payment is made).
This is specific to insurance;

interest - new rate

The links are a bit dated, (2003 and 2001 respectively) but that's probably because they haven't been changed/updated since.

8% simple interest all the way - accept nothing less, IMHO

So in fact I find that Lloyds, true to form, has tried to cheapskate and to imagine that if they offered me a figure which appeared to be based on an established method of calculation, that I would accept in the belief that I had received at least as good as might have been offered by the Ombudsman.

In fact they have acted deceptively and it reinrforces the view that they should not be trusted.

I am referring both the question of compensation and also the fact of this disinformation to the Ombudsman.
I would notmally go the court route but in this instance I am interested to see how the Ombudsman reacts.

I'll post results here - when the matter is eventually decided.

Yes, but the fos will calculated the 8% correctly so you should have no worries on that score.
However, if PPI is missold then it seems to me lnly just that they should not make any profits on it and that you should ask for restitutionary damages.

I would suggest, as your claim is already with the FOS that you write and say that you want restitutionary damages.

I think that if the Ombudsman finds in your favour on the point that the PPI was missold that you will immediately be in an excellent position to refuse an Ombudsman's award of 8% but instead to go to the county curt on the issue of restitutionary damages.

A finding by the FOS that the loan had been missold will save most of your work having to prove it in court.
The company would still be obliged to repay you at least your premiums and you could then argue the issue of RD on the question of how much compensation.

I think that this would be a very effective way forward.

I can imagine that if a copnay had an FOS decision against them that they would be very frigthened of going to court on the issue of RD and might very possibly make you a much improved offer to avoid the risk of a judgment against them.

Originally Posted by pompeyfaith

Interesting article below:

http://www.lawcom.gov.uk/docs/lc247.pdf

PF

I'm afraid that this is not relevant to the issue of restitutionary damages for money paid under a mistake. This aspect of restitutionary damages is specifically excluded from the article: unjust enrichment by extraction.

No. Your document refers to RD as a remedy for torts or a breach of contract: civil wrongdoings.

For bank charges claims or for refund of PPI you would be claiming for monies paid under a mistake. This applies even where the mistake is made entirely innocently. Unjust enrichment can occur even in the event of an wholly innocent mistake.

Of course, if your evidence is good enough to sho that PPI was missold as a result of a deliberate wrongdoing, then you would be looking at RD in respect of a civil wrong - eg. misrepresentation - or even deceit. If you could show a deceit, you might even be able to cliam exemplary damages on top.

PPI claims might sometimes be sold on the basis of a civil wrong.
However much we suspect the banks of being perfectly aware that their charges were unfair and unlawful, I think that we will have to stick to innocent mistake.

If anyone has evidence that their PPI was deliberately missold or that their PPI application was fabricated, they should come to us and we will advise them how to bring a very serious claim in the court which could yield quite substantial compensation.

Whatever the circumstances of a PPI claim, everyone affected should demand restitutionary damages.

Everyone reclaiming their bank charges should also demand restitutionary damages.
There is absolutely no reason why the bank should profit from a single penny.

The only bank which I am aware may have lied to their customers about the nature of their bank charges is the Yorkshire Bank which has expressly claimed in their court documents - signed as a statement of truth that their charges reflected their administrative costs.

The Yorkshire Bank even attempted to counterclaim the equivalent value of the charges claimed on the basis that that was the cost to them of the various "breaches" by the claimant in not keeping within their overdraft limit.

We have examples of this and can supply copies to anyone who wishes to sue the Yorkshire Bank for their charges and include a claim for restitutionary damages.

I rate the chances of success of such a claim as very high.

subbing.
My OH has just had an offer to pay the 8% interest on PPI payments that he was forced to take from HFC. They want him to accept the interest only and refund the PPI and the payments he made back onto the loan which was defaulted when I was off work sick for 12 months. The thing is he probably would have been able to keep up with the payments had they not had an extra £78pm just for PPI. They have offered just over £200 interest only and the fos adjudicator seems to think this is fair.