Militant's Friend v Barclaycard

[slick132]

Hi MC,

 

Your letter looks good to go !!

 

[militantconsumer]

We have received an out of the blue letter from Barclaycard. It's surely too early to be a response to our FOS complaint.

 

The letter says:

 

Having reviewed your complaint I feel there is a lack of supporting evidence to confirm that the sale of PPI was carried out in accordance with our standard procedures. As a result I am willing to offer a refund of the PPI premiums you have paid and associated interest on this account.

 

There is a calculation attached and also a form which they want us to sign for a "full and final" settlement.

[militantconsumer]

The calculation is rather confusing and I am trying to work out if they have short-changed us on the interest. This is the summary:

 

Value of PPI premiums per period = £289.61

 

Value of compound interest charged on PPI premiums = £19.98

 

Interest on any credit balance at 8% per year = £0.00

 

Interest at equivalent of 8% per year for period from PPI policy closure to date = £117.64

 

Total refund = £427.23

[militantconsumer]

Here is the spreadsheet (I have re-typed this up because my scanner is out of action at the moment):

 

[militantconsumer]

Perhaps I am being thick but I can't quite understand how these figures tie up - or perhaps it is just that the spreadsheet has not been done properly whereas the summary numbers were calculated automatically.

[militantconsumer]

The other question to ask is whether we can ask for this payment by cheque rather than offset against the outstanding balance (as they are intending to do).

 

We could then use the money (plus a bit more?) to make them a "real" full and final settlement (of the whole account).

[MandM]

Hi MC.

 

I can take a look at the s/sheet for you when I get home this evening. Looking at it how it is (without the benefit of being able to work it out at the minute) it looks short to me.

 

Can I ask>>>> The figure in column 2 (PPI Premium) is the amount they ADDED to the card each month?

 

M

[MandM]

Edited

 

M

Edited January 6, 2010 by MandM
Edited

[militantconsumer]

Hi MC.

 

I can take a look at the s/sheet for you when I get home this evening. Looking at it how it is (without the benefit of being able to work it out at the minute) it looks short to me.

 

Can I ask>>>> The figure in column 2 (PPI Premium) is the amount they ADDED to the card each month?

 

M

 

Thanks MAndM. Yes, those are the figures on the statements we have.

[MandM]

Hi MC,

 

They haven't compounded the interest on that spread sheet, they,ve simply applied the monthly interest to the monthly premium.

 

The following months premium in each case should be added to a running figure like they've shown, although that figure should include the interest accumulating also, hence the interest becomes compounded. They have not paid compound interest in short, just month on month contractural interest.

 

If they've offered CI as I think that 's what your saying in post 53, they're diddling you.

 

Then, you want 8% on the higher figures (cumulative PPI plus CI).

 

Any problems just shout,

 

M

[militantconsumer]

Thanks for that, MandM. I am going to have to spend some time trying to work this one out.

 

But I think we might start by asking them why none of the figures in the spreadsheet (post#54) agree to the summary page (post#53).

[slick132]

Hi MC,

 

Have you produced your own speadsheet showing your interest calculations.

 

I think that would be a better way to negotiate on the matter of compound interest.

 

[MandM]

Slick's quite right. Doubt they'll give you the right figures - not really in their interest (excuse the pun).

 

Have a look at this thread. >>> http://www.consumeractiongroup.co.uk/forum/payment-protection-insurance-ppi/212778-emmtay-barclaycard-ppi-insurance.html

 

Look furthur down where Pompeyfaith gets involved.

 

M

[militantconsumer]

I've done a spreadsheet. Green cells I agree with Barclaycard. Red cells I disagree.

 

I actually think their spreadsheet is nonsense because it doesn't agree to their letter anyway.

 

I get a total of £267.86 plus £38.25 interest (compounded). That makes £306.11. Note that Barclaycard have frozen the interest since October 2005.

 

I haven't worked out the 8% court interest properly. But for simplicity let's assume that all the amounts go back to the mid point of January 2005. That makes 5 years of 8% interest (not compounded) which is 40% of £306.11 - or £122.44.

 

So my total is now £306.11 + £122.44 = £428.55. As Barclaycard have offered a refund of £427.23 I am inclined to think they have calculated it correctly (albeit they have enclosed an incorrect spreadsheet).

 

[militantconsumer]

So that leaves the question of whether we can demand that as a cheque payment or if they have the right to offset it off the alleged debt (without any agreement to back it up).

[slick132]

If your revised figures agree that closely to BC's, then you should accept.

 

You could only demand repayment if there are ongoing court proceedings. If there aren't, then the refund will reduce the a/c balance.

[militantconsumer]

So if they ever took us to court on this account and we were defending based on the lack of an enforceable agreement, then we could counterclaim for this £427.

 

And, similarly, if we had some kind of unenforceability hearing then we could also put in a claim for the £427.

 

But if we sign the full and final settlement form then those two avenues would be closed off to us?

[slick132]

No, money paid by you to the a/c, or credited as a refund due to claimed penalty charges or PPI, cannot be claimed back.

 

So, if you were defending a claim against you for the a/c, you you could not reasonably counterclaim the £427.

 

Following the Manchester test case rulings, you would be unwise to start action against the bank on the grounds of unenforceability.

 

As I see it, they way to get back what they owe is to calculate the interest yourself using the spreadsheet in the Interest Tutorial at Link No6 in my signature. Read the tutorial carefully where it refers to PPI and to Interest in Restitution.

 

Use one of the two spreadsheets given. This one is easier to use but may overestimate the interest for the reasons stated -http://www.shweb.pwp.blueyonder.co.uk/interestcalcs.xls

 

I think you'll find the figures will show much higher interest and the bank will refuse to pay this initially. Then you file a claim at court and seek repayment which they should agree to before a court hearing. They will HAVE to repay you direct to settle the court proceedings.

 

See what the figures show and you may well find the Interest in Restitution will put a large whole in the a/c debt.

[militantconsumer]

Barclaycard have written to us to say that they are going to start charging interest again - at a monthly rate of 0.5% (rather misleadingly, they do not mention that this is equivalent to an APR of 8%).

 

The monthy payments are remaining unchanged. I calculate that it will now take more than twice as long to pay off the outstanding balance due to this extra interest - up from 5 years to 6.4 years.

 

Are Barclaycard allowed to charge interest where there is no agreement? If not, how can we stop them?

 

We have never been defaulted so we can't just stop paying.

Edited July 3, 2010 by militantconsumer
miscalculated the repayment period as 10 years; should have been 6.4 years

[slick132]

HI MC,

 

Did you accept the refund to the a/c of £427.

 

If they are only charging 0.5% a month, that's low and certainly less than if the a/c were running normally.

 

Are you saying you can't just stop paying them because you'd then have your credit rating trashed. Is it ok so far.

 

[militantconsumer]

I have to disagree with you about 0.5% being a low rate. Sure, it's not comparable to the extortionate rates you see being charged elsewhere, but when the Bank of England base rate is 0.5% PER YEAR, I'm afraid I find 0.5% PER MONTH, COMPOUNDED, rather a high rate to be charging.

 

The £427 refund is in limbo as it has been neither accepted nor rejected.

 

Barclays have, for some strange reason, never defaulted this account. Instead it has been running with an "I" code, which I believe means 'arrangement'.

 

Other creditors defaulted us in summer 2005, which means that all defaults will drop off in about a year's time. The last thing we want is a new one now, as we would have to wait another 6 years.....

 

I do wonder whether there is a way of challenging Barclay's right to charge interest at all considering that there is no credit agreement.

[slick132]

Hi MC,

 

I do wonder whether there is a way of challenging Barclay's right to charge interest at all considering that there is no credit agreement.

 

I've been back through your thread and can't see where you established there is no credit agreement.

 

Are you saying there isn't one and BC have admitted this, or that they've not produced it so you assume they don't have it.

 

[militantconsumer]

We have received a letter from Barclaycard telling us that we can have a new Barclaycard because we have been making regular payments.

 

At the same time we are making some changes to your terms and conditions. Your new standard purchase rate will be 11.90%, which is higher than your repayment plan interest rate, but will be lower than the standard purchase rate that you were on under your previous cardholder terms and conditions. Your new standard rate will apply to the whole of your outstanding balance.

 

The letter also states:

 

If you would prefer to remain on your existing repayment plan and not receive a new Barclaycard, please give us a call on 0844 241 2972 .... Once you receive your new card your existing repayment arrangement will stop.

 

How very generous to give somebody with 3 defaults on their credit file and thousands of pounds of debt a new opportunity to get into more trouble (whilst doubling the rate of interest charged on the whole balance claimed by Barclaycard).

 

6.9% is bad enough, but at 11.9% it will take 7.6 years to pay the balance off even if we cut the card up as soon as it arrives and never use it.

 

The letter implies, but does not categorically state, that if we refuse the new Barclaycard then the interest rate will remain at an APR of 6.9% for the existing balance.

 

My friend is currently looking for work and has no income.

[slick132]

So will you reject the new card and ask that the existing lower int't rate continues to be applied.

 

[slick132]

So will you reject the new card and ask that the existing lower int't rate continues to be applied.