Can banks legally keep PPI award?

[platignum01]

Hello everyone,

 

I really hope that I can have an answer to this problem and that it may help others as well.

 

Recently, after much struggling with a sense of guilt!

I decided to go ahead and use the services of a claims company to try to reclaim some of the PPI I believed I had been mis-sold.

 

Within a few days of contacting the company i received a call and made a few claims through the company.

I believed it to be a no win no fee so was quite happy to pay the charges should they be successful and should I receive any payout on a successful claim.

 

Today I received a bill from the company for over £400 for their services.

 

In the same envelope was a letter telling me that the bank had made me an offer for over £1100.

Delighted - no! I thought I was going to be over £600 better off after I had paid the claims company, was I ever wrong:(

 

On closer scrutiny the bottom line is this -

Whether I agree to the Bank offer or not the claims company want their fee.

The bank offer is to pay £1100 and to take over £900 of the money for an existing loan I have with them.(not in arrears)

 

I feel like I'm being ripped off because I am being asked to pay a claims company before they will process my claim

and the bank want to keep most of the award from the PPI complaint.

 

it goes like this -

2 forms in the letter for me to sign -

one for the claims company to get their money

the other for the bank to get my money,

only I dont get the full 1100 from the bank

I only get £180 after the existing loan is settled,

and I dont even get that unless I pay the £419 to the claims company up front.

And, to add injury to insult even if I don't agree with the banks offer

(not the amount, just taking the money they owe me to pay an existing loan not in arrears with the payment)

 

and reject the offer, the claims company have billed me anyway.

 

'Rock and a hard place' and the word 'squeezed' come to mind.

 

Now my perspective is this (and I would appreciate any sensible comments and advice on where I stand and how to proceed in all this from a legal perspective please)-: the claims company should not have billed me prior to my accecptance of the banks offer because as far as I'm aware the bank should pay the full award settlement to me before I have to pay the claims company. This is not the claims company getting me the money legally due to me it is the claims company getting my money and the bank keeping it. I'll end up a further £240 out of pocket!!Which I can not afford - I can barely make ends meet as it is.

 

The history with this bank is this:

I had 2 loans with them in 2003/2004. I went into arrears with payments because of redundancy.

After a period of time of paying off a reduced amount they were bought out by a larger bank and that bank wrote to me

and offered me a solution to consolidate the existing amounts outstanding into one new loan,

thereby getting rid of the loans and the bad debt.

 

I accecpted that new loan agreement nearly 6 years ago and have not missed one payment in all that time.

The bank now want to take the money I'm being offered for being misold PPI on those original loans and use it to pay off the balance

- surely that cannot be right?

 

I know I owed the original loans but a new loan agreement had been extended by the bank and agreed.

 

I want to contact the claims company and tell them that I do not accept the bank offer and do not accept that I owe them any fees

until I receive the settlement in full into my bank account from the bank.

 

Can anyone give me some sound advice please?

 

Many thanks in advance

Edited July 13, 2012 by platignum01

[ims21]

Hi

 

As far as the claims company are concerned you need to check the T&Cs you signed up to.

 

I would not be paying them anything until the matter is resolved and you have received the money from the bank. Banks have been known to change their minds and say they have made an error and that they are not upholding the complaint after all. So get the money before you pay the claims company.

 

The bank can only set off against notified arrears. If there are no arrears the refund comes to you.

 

The principle on loans is that you get back all of the premiums paid to date plus 8% interest on them from the date of payment to the date of settlement. Where a loan is live, the remainder of the loan is restructured to remove any PPI element still remaining in it.

 

Have a read of No.1 in my signature for more detail.

 

If it were me I'd write to the bank and get them to forward a copy of the offer to you so that you can check whether the figures are correct.

 

Sadly this is one of the pitfalls of using a CMC which is why we never advocate using them as they can do nothing that you cannot do for yourself.

 

Have you got the loan agreements and a record of all the payments made on the loans?

 

So, get the information from the bank and don't pay the claims company until you have your money.

[platignum01]

Thank you ims21 for your reply and advice.

 

I read the 'Terms of engagement' on the back of the letter of authority I signed up to with the claims company. It goes as follows - :

The way I have to deal with this is to try to talk to the claims company about the offer from the bank,as I haven't contacted the company and cannot cancel it now,as detailed in paragraph 3. Cancellation Rights and Charges part e.:

Instead of a cancellation charge the claims company shall be entitled to charge You the full Fee in the following circumstances:

(i) if an offer for compensation is received by You or TCG before a cancellation under 3b or 3c is complete; or, (ii) cancellation is completed, but Compensation is made within 4 weeks of the cancellation; and, if any of these apply the claims company is entitled to invoice You for it's full Fee less any cancellation charge already paid.

 

Nowhere does it state that I CANNOT approach the bank myself, only that, paragraph 5.You Acknowledge and Agree, point b:

That bt signing and returning the Letter of Authority You agree to be bound by these terms and appoint the claims company to provide Services for such a period as to allow the claims company to assess and, if reasonably possible, complete hte claim.

 

However,part j of the same paragrah states:

The claims company will accept no liability for an unsuccessful Claim or for the amount of Compensation paid to you.

 

Meaning the claims company intend to get paid no matter what.

 

I am willing to pay the claims company after a successful claim. :

2. 'claims company name' Fees

f. Compensation may be used by a 'Bank' to reduce any outstanding debt You owe then and You understand that the claims company Fee of 30% + VAT will be payable to the claims company based in the total amount of calculated Compensation. The claims company will invoice You for the Fee which will become immediately due and payable by You to TCG.

 

Effectively, the claims company have the right to act on my behalf, fair enough, they got me an offer of compensation. The crux of the matter is this : Does 'any outstanding debt' constitute 'notified arrears'?

 

My case would be that it does not.

 

The compenstation offer is for two old loans that have been closed. They were in arrears but a new loan agreement was entered into and this new loan is not in any 'notified arrears', therefore it is not a debt it is a loan. The new loan agreement states that the purpose of the new loan is for repaying existing account(s) over a period of 120 months. Any arrears on the two old closed account were gotten rid of when the new loan came into place.

 

Therefore I will try this, after taking your advice very seriously and apprectiveally.

 

I will contact the claims company and put my case to them. I will endeavour to expalin that I reject the banks offer, give them the current loan current loan agreement number and tell them that I will contact the bank to send me a current statement of the existing loan account showing there are no notified arrears on the new loan which I will then forward to them.

 

If I have no success with that then I will be left with no other option other than to approach the bank directly, seek compensation myself through the small claims court if necessary and complain to the claims company about their level of service as I believe they have not acted in my best interests.

 

In any event my current financial situation is such that my current monthly expenditure exceeds my income so paying them would put me in further hardship - the whole reason I took out the loan with the bank in the first place was so that I could make affordable monthly payments. I cannot afford to have the compensation taken back by the bank. It would put in me in a worse financial position than I am in already.

 

maybe the claims comapny will see sense and get me the settlement in full so that they can be paid on a no win no fee basis.

 

Or I wonder whether the practices of claims companies may be investigated, just like the banks in the future?

 

Sincere Thanks

Edited July 14, 2012 by platignum01

[ims21]

The crux of the bit about the bank is that if there are no arrears then there can be no set off.

 

It appears that it is not the offer you are rejecting but the proposed method of dealing with that offer. (Although you should check that the quantum of the offer is correct).

 

Bear in mind that you have appointed this claims company to act as your agent and that does not prohibit you from corresponding with your bank on this. You are still the principal in the relationship between you and the claims company so the bank must correspond with you if you so wish.

 

As the bank will be following fos/FSA guidelines for redress, you should be pointing out that those guidelines do not allow for a set-off where there are no arrears if the claimant does not wish it.

[platignum01]

Update: 10.20am 14.07.12

 

I have contacted the bank and will receive a statement of account showing no arrears within 5 working days.

The claims company department is closed until Monday.

[platignum01]

Thank You. That is exactly correct. I'm going to the FSA website to look for a standard letter that I can send to the bank to point out that the FSA guidelines "do not allow for a set-off where there are no arrears if the claimant does not wish it".

1. get the statement showing no notified arrears - requested

2.check the quantum - today

3. read the FSA guidelines - today

4.Once I have the statement of account that I requested this moring showing the no arrears and checked the quantum of the offer is correct contact the bank in writing. I will tell make reference to the claims company reference number and that up to now the claims company are still dealing with my claim but that I would like the bank to correspond with me also. I will point out -( what I was not sure of up to now) - that FSA guidelines "do not allow for a set-off where there are no arrears if the claimant does not wish it". Ask the bank in that letter to give me the option under FSA guidlines to have the full amount of compensation paid to me directly as the account is not in arrears and to revise the terms of it's offer to reflect a full settlement payable to me.

5. In conjunction with point 4 send a copy of the letter to the bank to the claims company along with a cover letter referring to the action I have taken with the bank, and, asking the claims company as a gesture of goodwill to suspend their request for payment for now to the claims company in light of the FSA guidelines and new action I have taken with the bank, pending the outcome of the action with the bank. I will ask the claims company to forward me all copies of correspondance on file between the claims company and the bank that have been made to date on my behalf under the terms of the data protection act. If they refuse the reasonable request to suspend payment and/or forward copies of their correspondance with then bank then I will make a complaint to the claims company and if there is no satisfactory outcome in my favour on that initial complaint then my next option to consider is to complain to their governing body.

6. today - research what action I can take and consider the options should the bank refuse to make a full settlement payment to me.

 

In light of what you have pointed out I cannot envision anything other than a successful conclusion.

[platignum01]

Having read this article' Banks use PPI refunds to pay outstanding debts' on the Beat my debt website it would appear that the bank may be using set-off as the existing loan is 'seen by them' to be an outstanding debt. Having spoken to the bank I was advised to contact the Collections or litigation department on Monday and check the status of the two closed accounts. Further than that the operator I spoke to could not discuss the case with me further other than to tell me that the collections department can explain to me why the bank want to use the compensation as set-off.

The upside is that I can ask them to consider my case and ask them to consider not applying the compensation as set-off due to the account not being in arrears.

 

I checked the FSA guidlines on set-off.

 

I also spoke to the claims company who were great. They advised me to ask the bank to make payment to me in full because the current loan is not in arrears. I've agreed to let them know the outcome with the bank and they have very kindly offered to set me up with a payment plan so I can spread the cost of the payments to them if the bank still want to use set-off.

 

I'm greatful to everyone who has given me sound advice and help

Edited July 14, 2012 by platignum01

[MrHat]

Subbing

[ims21]

Hi

 

All good stuff that you have done today.

 

Just one small thing....you do not "ask" the bank to reconsider the allocation of the refund....you "demand".

[platignum01]

I definately feel confident enough to "demand". No is not an option.