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MBNA PPI Award “Interpretative” Calculations?


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Hello all,

I'm at the end of my tether here! Although reading this I am probably earlier on my journey down the yellow brick road than some of you.

I just need some confirmation that my hunch is correct and my redress is lower than it should be. I feel it is too low, the info on here suggests it could be low and I keep working through the calculations (I have decent excel skills and some financial knowledge), however i cant help but feel that I am missing the 'twilight zone' trick in these calculations somewhere.

In a nutshell... MBNA card taken out Nov 2001 15.9% APR. PPI premiums £1,595 (Paid to Sept 2006 when PPI cancelled). MBNA redress was £3,553 (£1,595 PPI + assoc interest £463, + 8% £1,495)

The MBNA calculation was built on V20E B041. Is this one of the models that has calculation flaws? The associated interest just feels too low to me and reading the offers others have received they seem so much higher. I need to decide if I will refer to Ombudsman in the next couple of days. Can anyone help :???:

 

Timeline

Nov 2010 MBNA SAR

Nov 2011 Referral to FOS

Jan 2013 Adjudicator not upheld & referred to Ombudsman

Sept 2014 Finally Ombudsman upheld

Oct 2014 MBNA Offer but calculation low

Oct 2014 Banked chq but referred back to FOS for calculation review

Dec 2015 Adjudicator finally recommends recalculation based on incorrect 'Minimum' assumptions

May 2016 MBNA recalculate an increased offer but still feels too low

May 2016 Pending decision to refer to Ombudsman

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Hi Aspire

 

 

Same build sheet as me V20 B041. Appears to be have been running May 14 to Oct 14. My offer was May yours Oct.

 

 

Your revised offer what build was that? Also what are the initials of your adjudicator.

 

 

My concerns were partially upheld by the adjudicator, and a revised offer received Oct 16 but still has flaws and issues. I've been waiting for an Ombudsman decision since May 15.

 

 

Lots of M's and F's and the balance never goes negative?

 

 

You are only receiving interest on the surplus pot?

 

 

Does that sound familiar?

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Not looking good another decision on MBNA.

 

 

http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=112186

 

I don't agree Miaspa!

that claim initially looks OK to me in most respects, but I reckon it only got the attention it had because the claimant had a 'representative' - and FOS knew they couldn't just fudge & fob-off like they seem to do at every opportunity. It appears that both parties accepted the Provisional Decision in principle - which included the refund of PPI-associated charges/costs - but when MBNA provided new calculations, they said there were no such charges, and this appears to have been accepted.

 

The FOS appear to have been sent MBNA spreadies, and found that some earlier premiums had not been refunded - which they then ordered MBNA to do. Apparently MBNA then re-calculated the entire claim (including these earlier premiums) using their now infamous F&M methodology - and this resulted in a reduction of Associated Interest of £8,200. The FOS appear to consider the new MBNA method as more accurate - but have not explained why. The FOS say they have looked at the updated calculations - which implies that they have been shown exactly how the interest has been calculated - yet they have always insisted that they had never been given this information.

 

The FOS also seem to be confusing the term 'compensation' with 'refund' and/or 'redress' - and so does the 'representative,' who appears to have worked out that the 8% interest on one account was too low - but referred to it as 'compound interest.' As a result, the question of the 8% simple interest calculation was not looked into, whereas it is the most glaringly obvious error, which can be easily and simply proven to anyone with a basic knowledge of maths - and (of course) who is interested. The ‘representative’ also appears to have used a spreadsheet that makes the common error of calculating the apportioned amount of monthly PPI – Associated Interest with no regard to the actual interest charged each month. This usually results in a number of months where the calculated PPI – Associated Interest exceeds the actual account interest charged, which is erroneous because one cannot reclaim any interest that was never charged. The calculation should apply an apportionment ‘cap’ of 100% of the actual account interest charged because without this cap the calculation leads the claimant to wrongly assume that the Associated Interest has been underpaid in this case, the ‘representative’s’ calculation of PPI – Associated Interest exceeded the total amount of account interest paid over the whole life of the account, which is a situation that can occur without ‘capping’ the calculation – this is very likely a case of error.

 

So it seems to me that we have two errors by the 'representative,' which confused matters - but we now have a published example where the FOS effectively admit that they have been shown exactly how the interest has been calculated - despite their repeated denials to us and others. We also have an Ombudsman who considers that "...the way MBNA now calculates its reconstruction is more accurate to work out how much interest was paid for the premiums." The Associated Interest calculation (which is the account interest paid on the premiums) is not part of the 'account reconstruction' calculations at all. The Associated Interest calculation (which is the portion of the account interest paid on the premiums) is NOT dependent upon the 'account reconstruction' calculation at all. The 'account reconstruction' is purely to show what the theoretical account balance would have been if there were no PPI - and as such, it is dependent upon the Associated Interest calculation being correct before the 'account reconstruction' commences. This reconstruction is then used purely for calculating any 8% simple ('compensatory') interest.

 

Sure - this is all that we have been saying all along, but the FOS have denied there was anything wrong with MBNA's calculations. What we now have here is a published statement by a FOS Ombudsman that they have checked the new MBNA calculation methods and approved them - but which also states that the calculation of Associated Interest is a part of the 'account reconstruction' calculation - which it is not. So we now have a challenge that we can make to the FOS - not just for one individual claim at a time (which is what they have been trying to split us up with) - but a challenge to the veracity of their published PPI reclaim resources, which are to be taken as a guide to all claims, and not just single/individual claims.

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The calculation should apply an apportionment ‘cap’ of 100% of the actual account interest charged because without this cap the calculation leads the claimant to wrongly assume that the Associated Interest has been underpaid in this case, the ‘representative’s’ calculation of PPI – Associated Interest exceeded the total amount of account interest paid over the whole life of the account, which is a situation that can occur without ‘capping’ the calculation – this is very likely a case of error.

 

 

But isn't it interest in restitution? Therefore Sempra metals applies.

 

 

The credit card company has made a unjust profit using your PPI payment to loan to other consumers at the prevailing compound rate! You are asking for interest in restitution so no cap applies?

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My last email to my adjudicator my usual monthly request.

 

 

That’s another month passed and still no update, it’s now two years since you were allocated as the adjudicator on this matter. From correspondence held I have been allocated an ombudsman for the past six months.

When are we likely to have this matter resolved.

And the response!!!!

 

 

 

Thank you for your email. I do appreciate that it’s been a long time that we’ve had your complaint and I really am sorry it’s taking as long as it is.

Unfortunately I don’t know how much longer it will take. It’s out of my hands and not something I’m able to escalate or move forward. Also, unfortunately the ombudsman that was looking at your complaint has been taken ill, so it’s likely the final decision will be made by another ombudsman.

As always, I’ll let you know as soon as we’ve got more of an update for you.

 

 

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Hi came across this thread searching for MBNA updates/information out of curiosity as out of the blue today I got a call from them to say my claim payout I received in 2014 had been reviewed and I was due a further payment. Said she couldnt say what amount was but I would receive cheque and breakdown within 28 days. Even 50 quid is better in my bank than theirs so very chuffed

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But isn't it interest in restitution? Therefore Sempra metals applies.

 

 

The credit card company has made a unjust profit using your PPI payment to loan to other consumers at the prevailing compound rate! You are asking for interest in restitution so no cap applies?

 

For reclaiming PPI via the FOS, the FCA's PPI Redress Handbook at Appendices 1&2 within PS10/12 are the rules/guidelines that I believe the FOS (and the lenders) are supposed to follow - so I consider that PPI redress calculations should be based on this, in order that the 'methodology' is well-founded (and hopefully beyond reproach by the FOS.) The FOS appear to be able to make rulings that are not based in law, so following legal processes and applying caselaw (such as Sempra) is not necessarily within the FOS's remit as I understand it. I believe that we would probably have to take the claim into court if we are to follow that route, and I guess this is why the FOS decisions do not have to be legally 'compliant' - because we are not obliged to accept them - and can always go to court following a FOS decision.

 

So - following the PS10/12 guidelines - the calculation of credit card PPI redress is set out in Appendix 2 Example 6. This clearly shows that PPI redress is made up of 3 elements:

1. The PPI premiums charged each month;

2. The apportioned amount of account interest charged each month;

3. Compensatory interest at the Statutory rate of 8% simple on the amount of any account balance which would have been in credit if the PPI had not been purchased.

 

In my simplistic interpretation, I consider that tems 1 & 2 are both amounts which were wrongly charged and should be refunded - and as such they are elements of 'redress' or 'restitution,' as opposed to 'compensation.' Item 3 is the element of compensation, and this is awarded (as opposed to being refunded.) Arguably, this is the compensation that is paid for the loss of use of the money that the claimant would not have had to pay the lender if PPI had not been purchased. The premiums were paid by the lender to the insurers - so the lender might not be deemed to have retained this money for lending elsewhere. It may perhaps be argued that the lender retained a (hitherto undisclosed) portion of the premiums - but this is likely to be a matter for the courts, as the FOS are very unlikely to pursue this aspect, which is not covered by the PS10/12 guidelines.

 

Because the PPI premiums and the apportioned ('PPI-Associated') account interest are amounts which accumulated over time, then the 'running total' of premiums+interest can actually exceed the monthly account balances, because the balances are being regularly reduced by monthly repayments - but the 'running total' of premiums+interest is not reduced. As this is a theoretical reconstruction of what the status of the account would have been, then an adjustment has to be made when applying it to reality. The reality is that one cannot reclaim account interest that was never charged. So in an example month where the theoretical running total of premiums+interest is £1,100 - but the account balance owing is only £1,000 - then the interest charged would be nn% of £1,000, and not nn% of £1,100.

 

In actual fact, PS10/12 Example 6 does not in itself demonstrate the above 'principle,' as it is too simplistic an example - but this principle was in fact applied in the excellent spreadsheets created by Vampiress and used by CAG in credit card reclaims for several years, and I believe the logic of it is straightforward.

 

With regard to reclaiming interest on the money which the lender has theoretically used to finance lending elsewhere, this is an argument that goes beyond the comparison between MBNA's calculation 'methodology' and the FCA/FOS's - and which I believe was discussed as 'Contractual versus Statutory Interest' at great length in CAG many years ago before being abandoned quite suddenly. I think that argument still goes on elsewhere - particularly where business accounts are involved - but this is where we venture into legalities as opposed to FCA rules - and where case law such as Sempra et al is relied upon.

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  • 4 weeks later...
Hi came across this thread searching for MBNA updates/information out of curiosity as out of the blue today I got a call from them to say my claim payout I received in 2014 had been reviewed and I was due a further payment. Said she couldnt say what amount was but I would receive cheque and breakdown within 28 days. Even 50 quid is better in my bank than theirs so very chuffed

 

Did you ever receive a refund after this call as I received a similar call beginning May and have still heard nothing.

 

Debbie

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Well as I still hadn't got anywhere with having my ombudsman review I contacted my lovely MP and asked if she could ask Ms Wayman for an update. The response is below:

Thank you for your letter of 23 May about your constituent and the complaint with MBNA.

I understand we’d advised you that Miaspa 2010’s case was passed to an ombudsman in December 2015. You’d like an update as to where things currently stand as they are yet to receive a decision.

Miaspa 2010’s case was passed to an ombudsman in December 2015 but, unfortunately, she went on long term leave due to ill health. As the case is a complicated one, we had to pass it to another one of our specialist ombudsmen and this has taken longer than we’d hoped. I’m really sorry for the delay that your constituent has experienced.

I can confirm that Miaspa 2010’s case is now with another ombudsman. Once he has thoroughly reviewed the details of the case, he will send Miaspa 2010 his decision. As mentioned above, the case is a complicated one so it may still be a few weeks before the ombudsman is able to send his decision, but things are underway.

I hope my response explains where things stand – but please do get in touch if you have any further questions. Please of course feel free to send a copy of my letter to your constituent

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Hi Debbie.

Not received anythhing yet and I also got call beginning of May.

I am going to ring them tomorrow if nothing arrives so i will let you know how I get on

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Just telephoned MBNA and they said that they have not sent any cheques out as yet. I was told that they have recalculated all of the PPI claims that were upheld and the initial call we received was just to check that the contact details, address ect were still the same and they will be sending the cheques out shortly. The lady gave me a direct contact number - 0800 917 6592 and said to ring at any point for a further update.

 

thanks

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How interesting...!

 

Very. She said they were still naking initial calls to people. Am hoping they have made a massive miscalculation on mine haha

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Very. She said they were still naking initial calls to people. Am hoping they have made a massive miscalculation on mine haha

 

If that is the case?

All MBNA PPI complainants had better ensure that MBNA hold their correct contact details!

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I wouldn't build your hopes up. I had a letter from RBS today advising they had reviewed my payout. The magnificent sum of £14.92 after tax.

 

Well that's RBS for you...tight fisted bunch who've always been in the establishments pocket(s)

 

As for MBNA, we all know that they have fudged our PPI calculations. But what are the FOS going to do about same?

This has all been caused by the various Gov's lack of regulation of the Greedy Bankers.

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  • 2 weeks later...

Well I have a provisional decision from the Ombudsman, all my minimums are going, but not the "fulls" and the penalty charges are a no go.

 

 

On the upside it does give me some ammunition to tackle the "fulls" or the penalty charges but not both. I think I can argue one or the other.

 

 

It refers to Jonqil Lowe as a University Lecturer.............I have left the decision at home but will to scan it and post it here. I will also email a copy to Jonqil.

 

 

I have until the 29th July to respond and already drafted a response mentally.

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Well I have a provisional decision from the Ombudsman, all my minimums are going, but not the "fulls" and the penalty charges are a no go.

 

 

On the upside it does give me some ammunition to tackle the "fulls" or the penalty charges but not both. I think I can argue one or the other.

 

 

It refers to Jonqil Lowe as a University Lecturer.............I have left the decision at home but will to scan it and post it here. I will also email a copy to Jonqil.

 

 

I have until the 29th July to respond and already drafted a response mentally.

 

It seems that JL hasn't quite understood. Abandoning the 'Minimums' will make some difference, we think - but we don't think it will be enough to properly match what they should be offered when the 8% interest is calculated properly.

Hopefully Miaspa, you will be able to post up the decision shortly?

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I'm a bit hesitant to post the provisional decision up at the moment as not sure if its allowed.

 

But here is my response.

 

In reference to your letter of XX/XX/XXXX, I wish the following to be considered before any final decision is made.

 

At both adjudicator and ombudsman level one matter has never been addressed.

 

On both calculations MBNA have omitted the following.

The balance of the PPI and associated interest does not receive any statuary interest after MBNA sold the debt to Max Recovery in May 2011.

There is no card balance to offset the PPI and associated interest from this point although MBNA do not recognise this.

 

The other point relates to the restatement of penalties and payments.

 

I quote from the decision

 

I don’t think MBNA needs to look at Mr H’s reconstructed balance in the way he wants because the reconstructed balance never existed, Its created long after everything happened and it’s based on lots of assumptions. It doesn’t necessarily show what Mr H’s actual spending and behaviour would have been if he hadn’t had PPI.

And I think it’s too far removed from what actually happened to use just to decide if PPI caused a Fee.

 

And again

 

For the reasons I’ve explained above, I think Mr H’s balance is to far removed from what actually happened to use just to say what Mr H would or would not have done if he hadn’t had PPI.

 

If both these statements are correct then there is no justification for the restatement of payments allocated to the card by MBNA.

The balance never existed and is too far removed from what actually happened.

 

For MBNA to restate any payment there needs to be reasonable assurance that the reconstructed balance is correct, if the reconstructed balance is considered unsuitable for restating penalties then the same applies to restating payments.

 

Conversely if the reconstructed balance is good enough to alter payments on the account, penalty charges need to be revisited.

 

It seems unjust that MBNA can use the reconstructed balance to make such fundamental changes to the account, but the same courtesy is not given to the consumer.

 

The Financial Ombudsman Service is supposed to give an unbiased consideration of any complaint.

For the reasons stated above, this does not appear to be the case.

 

http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=118798

 

Anyone from here? Being picked off one by one!!

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http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=118798

 

 

Anyone from here? Being picked off one by one!!

 

That was is exactly the strategy of the FOS; picking each complaint off one by one!

 

They would not accept our et al mass complaint, in which they were provided with two actual working examples.

So, how are the FOS going to explain their fob off to the Complainants who provided their MBNA spreadsheet examples?

 

Not impressed...

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http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=118798

Anyone from here? Being picked off one by one!!

 

Your not alone Miaspa, Read my final decision and feel free to make any comments. I have had the same ombudsman make the final decision as you. I am sure you will notice the exact same wording in the standard letters he uses.

 

The final decision has been made and MBNA are;

 

1. Still paying 8% on a debt balance

2.Have not answered my questions with support from the ombudsman in that it is not their job role to punish MBNA and only interested in what they have done to put things right.

 

I have got half of what i wanted as the ombudsman advised that they were paying back my PPI at 28% though i can,t see how that is in the calculation sheet sent to me and the calculation sheet i sent them i was told was running at 300% (i wish it was !) there is no way the sheet was.

 

My main gripe is the no acknowledgement of compound interest.In the decision letter the ombudsman advises that compound interest would not take into account payments on the account and how they reduced the outstanding balance. (page 2 paragraph 8 of letter) Correct if i am wrong though i thought compound interest on the premiums applied in the same way as any card purchases and unless you made a full payment (which i never did and still to this day owe money on the account) would incur interest on first month after being charged and would continue to compound having a cumulative effect until the account is cleared ? This would apply irrespective of your payments and if they reduced the balance.It would only be the amount would reduce I.E the 79p per £100 of the balance collected as PPI ?

 

 

I have until this Thursday to accept or reject and would welcome any comments . I have battled for nearly 5 years and have gone from owing nothing to a recalculation of £70 and then another recalculation of £400. I have questioned this to FOS saying does,t this seem strange to you ? how each recalculation changes and amount increases? though have not seemed to get anywhere.

 

Apologizes for the slanted scan. I have also posted the last and final calculation sheet MBNA sent the FOS

FOS final decision doc.PDF

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Your not alone Miaspa, Read my final decision and feel free to make any comments. I have had the same ombudsman make the final decision as you. I am sure you will notice the exact same wording in the standard letters he uses.

 

The final decision has been made and MBNA are;

 

1. Still paying 8% on a debt balance

2.Have not answered my questions with support from the ombudsman in that it is not their job role to punish MBNA and only interested in what they have done to put things right.

 

I have got half of what i wanted as the ombudsman advised that they were paying back my PPI at 28% though i can,t see how that is in the calculation sheet sent to me and the calculation sheet i sent them i was told was running at 300% (i wish it was !) there is no way the sheet was.

 

My main gripe is the no acknowledgement of compound interest.In the decision letter the ombudsman advises that compound interest would not take into account payments on the account and how they reduced the outstanding balance. (page 2 paragraph 8 of letter) Correct if i am wrong though i thought compound interest on the premiums applied in the same way as any card purchases and unless you made a full payment (which i never did and still to this day owe money on the account) would incur interest on first month after being charged and would continue to compound having a cumulative effect until the account is cleared ? This would apply irrespective of your payments and if they reduced the balance.It would only be the amount would reduce I.E the 79p per £100 of the balance collected as PPI ?

 

 

I have until this Thursday to accept or reject and would welcome any comments . I have battled for nearly 5 years and have gone from owing nothing to a recalculation of £70 and then another recalculation of £400. I have questioned this to FOS saying does,t this seem strange to you ? how each recalculation changes and amount increases? though have not seemed to get anywhere.

 

Apologizes for the slanted scan. I have also posted the last and final calculation sheet MBNA sent the FOS

 

 

FOS has given you until Thursday?!

How generous of them; ask for extra time in which to respond.

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