Thread: PPI: Totally confused by Barclay's actions (please help)

Hello - could anyone please help me make sense of a recent letter I've received from Barclays? It's quite a complicated situation.

In April 2005 I took out a graduate loan from Barclays, for £10k @7.9%.

They added PPI upfront to this, which I was unaware of until January 2006.

When I found this out, I went to the branch and asked for this to be removed, since I did not need it (I was also mis-sold it, as I was unemployed when the loan was taken out).

The bank said they would be happy to remove it, which they did in March 2009. They apologised for the delay (it took 2 months) and so refunded me the PPI I had paid between January - March 2006, but the way the loan worked it meant that they had to take a new loan out to repay the old one (so, the new loan didn't have PPI, whereas the old one did).

The new loan was on the same terms and conditions as the first one.

Recently, I decided to apply to Barclays to reclaim all the PPI I had paid, since I'd paid 7 months towards the loan that PPI hadn't been refunded for, but I was clearly missold the insurance.

It was during the process of reclaiming the PPI that I made some discoveries, which I would like some help with if possible.

Primarily, it is my understanding - please correct me if I'm wrong - that if you ask a bank to remove PPI from your loan, the bank is under a legal obligation to ensure that after you have had the PPI removed you are not in a worse situation than before. Or, in other words, they can't change the terms, interest or anything else.

Now, at the time, I didn't pay much attention to what had happened with my loan. I was told that my PPI had been removed, and that the bank had taken a new loan out to replace the old one. But recently, I've tried to work out what had happened to the payments I had made on the old loan - and to find out where these had gone.

I'm fairly savvy when it comes to loans, so I know how upfront interest works, rule of 78 etc...and how in most simple interest loans early repayments go more towards the interest than the principal. But, surely I am in a worse situation just because I asked for the PPI to be removed: or, in other words:

I made 7 payments of £242 towards the original loan.

I then asked for PPI to be removed, so the bank took out a new loan for £10k.

However, I had paid £1,694 on the old loan, which wasn't 'carried over' to the new loan, so I am in a materially worse position because of asking for the PPI to be removed, which I understand the banks are prohibited from doing?

I wrote to Barclays and their response was really unclear and confusing: can you make sense of it? They said:

"Following my investigation your complaint has been partly upheld. Your original Graduate Loan was for £10,000 and the Payment Protection was £1,786.69. There were seven payments made of £242.10...

...when your loan account was settled [in 2006, when they removed the PPI], the new loan was opened for £10,000. A refund of £1,196.06 was made for the insurance involved with your original loan to your current account on 2 May 2006. The loan amount was not reduced as the payments were not refunded by the branch [my bold, for emphasis]".

Now, I had no refund at all to my current account. I think they are just using confusing language: I think what they *mean* is that the PPI was removed from the loan. I certainly wouldn't have received a refund because I had never paid this amount: it was 'added' to the loan - it never came from my account. Does that make sense? There was nothing to 'refund', as nothing was paid other than the initial 7 payments.

What I don't understand is: what do they mean my 'complaint was partly upheld'? Which bit? Why does the rest of the letter fail to say the bank are going to do anything?

Also, why were the loan payments not refunded by the branch? And should they have been?

I am totally confused by Barclays here - and I thought I'd post on these forums so if anyone can answer over the weekend I can then speak to Barclays on Monday.

As far as I can see, I've paid £1,694 into thin air. I know some people get confused because the first repayments on a loan always go towards the interest more than the principal, but they don't seem to have been included at all in the new loan, so I have paid this money for absolutely nothing.

Can anyone help?

Thread moved

...when your loan account was settled [in 2006, when they removed the PPI], the new loan was opened for £10,000. A refund of £1,196.06 was made for the insurance involved with your original loan to your current account on 2 May 2006. The loan amount was not reduced as the payments were not refunded by the branch [my bold, for emphasis]".

Now, I had no refund at all to my current account. I think they are just using confusing language: I think what they *mean* is that the PPI was removed from the loan. I certainly wouldn't have received a refund because I had never paid this amount: it was 'added' to the loan - it never came from my account. Does that make sense? There was nothing to 'refund', as nothing was paid other than the initial 7 payments.

I am also in a fight with the same bunch no refunds on PPi when loans were closed on refinancing. Case ongoing but have all the paperwork ready for the fos.

Please keep on top of them and be wary if they send you a questionnaire to complete. The questions are worded to try and catch you out to help them in their defence when you go to the FOS.

Originally Posted by bunglejemson

I'm confused by what they mean when they say I received a refund to my current account. I didn't - and in practice how could I?

If I take out a loan for £10k then they give me £10k, but if they apply PPI it means I owe an extra £1700 on top - it doesn't mean I have £11700 in my account. Why would they 'refund me' the £1700 to my current account if I haven't paid it yet? I've only made 7 months worth of payments, so yes, I'm owed some PPI back, but not the full amount.

They've attached ledgers to their response, showing the Breakdown of payments:

20 May 05: Account opened. Opening balance = 10,000dr
20 May 05: PPP (£1,786) added. Balance = 11,786dr

From May - Sept there was a payment holiday

20 Jun 05: interest added. Balance 11,864.52 dr
26 Sept 05: Interest added. Balance 12,112.21 dr

In September, payments (£242.10) started taking effect:

30 Sept 05: Balance 11,870.11 dr
31 Oct 05: Balance 11,628.01 dr
30 Nov 05: Balance 11,385.91 dr
19 Dec 05: Interest added. Balance 11,595.00 dr
30 Dec 05: Balance 11,352.90 dr
30 Jan 06: Balance 11,110.80 dr
1 Mar 06: Balance 10,868.70 dr
20 Mar 06: Interest added. Balance 11,085.83 dr
30 Mar 06: Balance 10,843.73 dr

It's at this point I went into the branch to remove the PPI. Here's what happened to the loan (according to the ledger):

28 Apr 06: Credit of 10,000 made to the loan. Balance = 843.73 dr
2 May 06: Credit of 935.05 made to the loan. Balance = 91.32

This 91.32 was the interest from March to May, so was removed from the account (as shouldn't have been applied, it seems), so:

3 May 06: Balance = zero and account closed

I don't have the ledger from the new account, but I can see from the letter (and my own records) that when it starts in May, the opening balance was 10,000.

So, I'm back to square one.

Follow Pompeyfaiths advice and submit a complaint with all of the documentation you have. If anything is missing send a Subject access request there are several links in the stickies at the top of the forums that you shoud read to gain information. Then claim your data then ask for your money back. You will have to do a bit of self help on the homework and if you have any questions just post them up in your thread

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