Barclays PPI Claim - Partial success, help needed!

[shinobi jones]

I contacted Barclays for a refund of PPI premiums paid after they added a £2,500 premium loan to the £12,000 I borrowed a few years back, my initial letter to them said:

 

Dear Sir/Madam

 

Ref: PPI for loan account number XXXXXXXXXXX

 

I believe I have been mis-sold a payment protection insurance policy in respect of the above loan account and would like to request a full refund of my premiums, plus interest paid.

 

I took out a loan for the sum of £12,100.00 at your Solihull branch on 13th February 2006. Unbeknownst to me the loan incorporated a payment protection policy which was paid for in the form of a premium loan totalling £2,582.35 which was added to the initial Cash Loan. The total amount of my repayments made on this PPI Premium loan plus interest paid on this loan is £ 2,533.22. This is based on an interest rate of 10.525% as quoted on the most recent loan statement.

 

Your salesperson did not check my personal circumstances at the time of sale, which they are under obligation to do. If they had done, I would have confirmed that I did not require such a policy.

 

I was not offered the opportunity, which I would have refused in any event, to pay for the payment protection insurance policy on a monthly basis which has led to my loan, and therefore the interest payments made thereon, being increased by more than 21% without my consultation. I was not advised that the cost of PPI would be added to the loan with interest being incurred thereon.

 

You are not allowed to make PPI a condition of taking out the loan unless you include the costs of PPI in the quoted interest rate, which you did not do.

 

In forcing me to buy this policy, you have also breached paragraph 8.6 of the Banking Code, to which you are a signatory.

 

I do not believe that being forced to buy this policy as part of the loan was a fair and reasonable obligation as I did not need this insurance and said at the time of taking the loan that I did not want it.

 

I am requesting a full refund of all my insurance repayments, plus interest, which over the 44 month term of the contract to date totals £2,533.22.

 

I am also requesting the immediate cancellation of the Payment Protection Insurance Policy and the subsequent reduction in my loan of the sum of £645.55 which I believe to be the remaining ‘capital’ amount of the PPI Premium Loan. If this reduction is not forthcoming I will be forced to make further claims which will total £739.97 at the end of the loan term.

 

If I do not receive a favourable response from you I will pursue this claim through the Financial Ombudsman.

 

Yours,

 

Shinobi

 

Had a response back today with the usual flannel not admitting fault but offering a refund. This is where it gets complicated. The refund they have proposed is made up as follows:

 

Present loan balance: £4,803.40

Less PPI Premium: £2,582.35

Less PPI Interest paid: £711.74

Plus PPI Payments Reversed: £2,443.76

Residual Figure: £3,953.07

 

Barclays have proposed that they cancel the existing loan and that I take another out for £3,900 (they are kindly waiving the other £53.07) over the remaining 18 months (its actually about 15 months but they can only do 18 mnths).

 

They have also offered to credit me with £366.56 for additional 8% interest on the premiums which I didn't ask for but will take!

 

My point is regarding the calculation above, they are proposing to take the PPI premium amount + interest paid off my outstanding balance which is fine but I can't see why they are reversing the PPI payments I have made (£2,443.76) surely they should either be giving me those back as a lump sum or leaving them in the loan and therefore reducing the overall balance to £1,509.31 as opposed to adding them back in?????

 

Am I reading this wrongly?? I can't believe that they were charging me £2500 extra + interest for PPI but have worked out that my loan reduces by about £850 as a result of taking the PPI off!

 

Sorry for long post but I'm struggling to get my head around it!

 

Cheers

 

Shinobi (i'll get you somehow Barclays )

[shinobi jones]

Shameless bump as I need to reply to their shenanigans soon

 

Cheers folks in the know

 

Shinobi

[amber]

Shinobi

 

I think(!) in this bit "Am I reading this wrongly?? I can't believe that they were charging me £2500 extra + interest for PPI but have worked out that my loan reduces by about £850 as a result of taking the PPI off! - they have applied the 'Rule of 78' calculations, hence the reduction in your loan only working out as a pittance of what they had charged you. Run a search on google for more info.

 

Or look at my thread which I have bumped for exactly the same thing, I don't quite fully understand it myself.

 

Read through the rules - I just removed a line I put it as I think it was wrong, sorry.

 

http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft262.pdf

Edited November 26, 2009 by amber

[amber]

Stolen from Spunkeyrich's thread:

 

The government also introduced new rules giving people who want to repay their loan early a fairer deal, abolishing the so-called rule of 78. The rule was one way in which lenders calculated how much interest a borrower should have paid at any stage of the repayment period of a fixed-rate loan they had taken out. While not unusual on credit agreements, it remained a mystery to many consumers.

Lenders will still be able to recoup some of the administration costs involved in settling a debt early, but the government has introduced a new way of calculating how much this will be that is fairer to borrowers.

Richard Mason, director of personal loans at price comparison website moneysupermarket.com, said: "The rule of 78 is an archaic and confusing calculation which has finally been overhauled. Consumers should not be heavily penalised for repaying their loan early and trying to get out of debt."

He added that on a £10,000 loan arranged over five years, three out of five leading loan providers would charge a fee for early repayment, and that only nine of the 70 providers listed on his website did not charge any redemption penalties. They are: American Express, cahoot flexible, Egg, Goldfish, Intelligent Finance, Virgin, Morgan Stanley, Northern Rock and the Post Office.

Mr Mason continued: "This new method of charging may also encourage consumers to switch between different loan providers and not feel tied in to one provider for a long period of time, thus allowing them to benefit from the many low-rate loans that keep joining the market.

"It is not out of the question that we'll see a similar trend to that experienced in the mortgage and credit card market, whereby consumers will switch and move providers to constantly utilise the best deals." The abolition of the rule applies only to new loans. Existing loans, for terms of ten years and under, will be covered from May 31 2007. Existing loans of a longer duration will be covered from May 31 2010.

 

Thread is here: http://www.consumeractiongroup.co.uk/forum/payment-protection-insurance-ppi/59087-rule-78-unfair-could.html

Edited November 26, 2009 by amber
added thread

[shinobi jones]

Thanks Amber I'll take a look at that. Not heard anything about Rule of 78 before.

 

I'm not sure whether that's the answer to my question though. Barclays figures confuse me where they say "Plus PPI Payments Reversed: £2,443.76" I'm not entirely sure what they mean by reversed.

 

If they mean that they are going to give me that money back then that's a result, cost of PPI loan + interest paid on it taken off my outstanding balance, PPI loan payments returned to me plus 8% interest, that all seems right to me.

 

Thing is they've made no mention of actually paying those 'reversed' payments back to me and the new loan they've recalculated seems to add them back onto the loan!

 

I think I'm going to call them and clarify this afternoon, I know how I think it should work but I also know that they think differently to us normal people!!

[alanalana]

Thanks Amber I'll take a look at that. Not heard anything about Rule of 78 before.

 

I'm not sure whether that's the answer to my question though. Barclays figures confuse me where they say "Plus PPI Payments Reversed: £2,443.76" I'm not entirely sure what they mean by reversed.

 

If they mean that they are going to give me that money back then that's a result, cost of PPI loan + interest paid on it taken off my outstanding balance, PPI loan payments returned to me plus 8% interest, that all seems right to me.

 

Thing is they've made no mention of actually paying those 'reversed' payments back to me and the new loan they've recalculated seems to add them back onto the loan!

 

I think I'm going to call them and clarify this afternoon, I know how I think it should work but I also know that they think differently to us normal people!!

 

Do not be pressured into taking out a new loan. This is aimed at keeping you well and truly on the debt hook.

 

Longer term added as you point out they only do 18 months.

The APR will undoubtedly be higher.

 

You should cancel the PPI and be entitled to a pro rata refund of the PPI balance still remaining.

 

You should be repaid the PPI montly premiums including the interest added.

 

You should then receive 8% statutory interest (simple) on each of the monthly PPI premiums paid. The interest should run from the date the premium was paid up until settlement of your claim is accepted.

 

The monthly premiums should be reduced so you are only paying for the actual loan figure and no PPI.

 

The Money should be repaid to you by way of a personal Cheque. There are however certain times when the bank can use refunds to offset other debts.

[alanalana]

Further to my last post.

 

Once you have the money then you decide if you want to use it to reduce the balance on the outstanding loan amount.

 

There is no requirement for a new loan to be taken out. In my own case against RBS I still have the same loan account number, over the remaining term of the loan, with payments adjusted to reflect I am now only paying for the loan figure.

 

I cancelled the PPI received a rebate which reduced the loan amount ( I was not as wise then) the payments were reduced but not by the expected amount. After a 12 month fight via the FOS the monthly repayments were adjusted and I received a refund of all my PPI premiums plus 8% interest. Total over £10K for seven refinancing loans.

 

hope this helps

 

aa

[shinobi jones]

Thanks a lot Alan, you've settled my mind.

 

Just spoken to Laura at Barclays Customer Relations and she admitted she couldn't understand how the claims handler (name as yet unknown) had calculated the figure. Unfortunately the claims handler wasn't available and I shall have speak to them on Monday.

 

If it works how I think it should and the PPI loan is taken off my outstanding balance as well as the interest paid (£4803.40-£2582.35-£711.74) that would leave an outstanding loan balance of £1509.31. They then refund the premiums I paid for the PPI which amounts to £2443.76 (plus £366.56 for the 8% = £2810.32).

 

They can then have the £1509.31 off me to repay the loan and shove their new loan and payment plan where the sun don't shine!

 

That would leave me £1301.01 plus £315 per month better off, just in time for chrimbo!!

 

Thanks again

 

Shinobi