Lloyds PPI Conumdrum

[makkapakka69]

Hi all,

 

I would be grateful of some advice on the following situation.

 

Over the previous few years I have been claiming back PPI on 2 loans from Lloyds Bank taken out in Feb 2001 (£10,000) and Feb 2002 (£20,400), the second of which was a refinancing loan which replaced the first, and which was settled in Oct 2005.

 

I previously started a reclaim on the second loan in 2009 and this was upheld by the FOS, resulting in a refund of £7947. I did not challenge this figure as at the time I did not believe that it may be inaccurate, so I signed the FOS acceptance and payment was eventually made.

 

This was broken down as:

 

Refund of ppi installments £3909

Difference in settlement figures £1506

Interest @ 8% £2332

Compensation £200

 

Once this had been settled, I started a reclaim on the initial loan. Again, Lloyds dragged their heels, initially rejecting the claim and allowing this to drag on for several month. Fast forward to November 2010, when they finally caved in and agreed to refund me. However, on looking at the settlement figures, I was concerned that they were incorrect, so asked for a full breakdown of the calculations. They refused, so I referred it to the Ombudsman for them to check over. Move forward to the present time, and the FOS are now finally looking at it.

 

When Lloyds agreed to a refund on loan 1, they said they would refund all premiums paid plus the difference between the actual settlement figure, and what it would have been if the ppi hadn't been taken out. This is what I signed for on the settlement form, and what they had also done on the previously reclaimed loan. However, what I received was a refund of all premiums paid, plus excess balance interest from the refinanced loan (loan 2). There was no mention of the payment for the difference between the actual settlement and no ppi settlement. Therefore it seems that Lloyds never realised that the loan had been refinanced when they offered their initial settlement, and because of this, their offer changed.

 

There offer was:

 

Refund of premiums £378 + £86 interest + £346 8% stat interest = £810

Excess balance interest £2,184 inc stat interest

Total £2994

 

This is now what is with the FOS.

 

I have now received an offer from Lloyds with an additional payment of £2127, but it again refers to the refinancing loan and not the original loan, although the reference does relate to the original loan. Again, it is for excess balance interest and is made because there was an error in their original calculation.

 

CONFUSED:-x:-x:-x:-x:-x

 

I have all the figures to hand for all refunds paid so far for both loans, so I would be very grateful if someone could see whether everything tallys or if they are playing games with me.

 

Loan 1 £10,000 taken out in Feb 2001 over 60 month with additional ppi of £2066. Payments ran for 11 month with total ppi payments of £378 over that time. The closing balance of the loan was £10,220 which was transferred to the new loan.

 

No ppi rebate was given!!!

 

This was refinanced in Feb 2002 with loan 2 for £20,400 with additional ppi of £4327. Payments on this loan ran for 43 month with total ppi payments of £3,909 until the loan was settled in full in 2005. A ppi rebate of £311 was applied to the account and I paid £8,021 to settle.

 

What I would like to know is are the refunds accurate and should I accept their new offer. I think the confusion has arisen because I reclaimed each loan separately and not as one big roll over loan, and the FOS redress seems difference for rollover loans compared to single loans.

 

Sorry for the long post, but i'd be grateful if someone could look at the figures as this is confusing me no end.

 

Many Thanks,

 

MP.

[ims21]

It seems you have all of the base figures and I would guess you have the dates of repayments?

 

Have a read of No.1 in my signature as all of the information is there to help you work out what the overall refund for the two loans should be.

 

If there turns out to be a significant difference then you should bring it to the attention of fos (since you have complaints open with them) so that you can ensure that you are put back in the position you would have been in had the PPI not been taken in the first place.

[makkapakka69]

Thank you for your quick reply ims21.

 

I've already looked through your tutorial, but i'm still having trouble working things out.

 

The FOS are currently investigating loan 1 only. I accepted Lloyds offer for loan 2 back in 2009 without even questioning their figures. (Before I knew about CAG!)

 

Would the FOS be willing to look at it again after so long?

 

Have I shot myself in the foot by reclaiming each one separately, as the redress seems different. That is what seems to be confusing me. Can I now claim both together?

 

MP.

[makkapakka69]

Yes, I have all the repayment dates to hand.

 

MP.

[ims21]

No don't worry about the order of claiming.

 

The fos should instruct the lender to put you back in the position you would have been in had the PPI not been taken in the first place.

 

So when loan 1 was settled, it is likely that you got a rebate at the time of settlement. However, it won't have been for the full amount and now that a claim is being upheld then that should be adjusted for the whole rebate due at that time. This is what is referred to as the excess balance.

 

In addition, in order to settle loan 1 (which was inflated with the PPI excess balance) you had to borrow more money on loan 2 than you would have done had there not been PPI loaded onto loan 1. This in turns means that you would have paid more interest on loan 2 as a result.

 

The redress that you end up getting should reflect those extras.

 

So if fos are looking at loan 1 for you then you should make sure that they are aware of the refinance so they can take into account the extra money you paid on loan 2 which in fact was as a result of the bank's mis-selling on loan 1.

[makkapakka69]

I've done some calculations using the formula, but i've got a couple of questions.

 

I did not get any ppi rebate from loan 1 when I refinanced with loan 2, so do I included the amount rolled over on the spread sheet?

 

I've followed the instuctions and added each payment made for loan 1, then all payments for loan 2 including the extra payments for the rolled over loan 1.

 

Is this the final total or is there any other interest to add onto the total?

 

MP.

[ims21]

Unusual for Lloyds not to give a rebate at all.

 

Any chance you can post up the final statement of account (minus any personal information).

 

If indeed there wasn't any rebate, you need to work out what percentage of the settlement figure was for PPI which is the amount rolled into loan 2.

 

You then need to work out what payments went to Loan 1 PPI via Loan 2.

 

It should then be possible to see what the correct amount of refund for loan 2 was and the amount relevant to loan 1, including the amounts rolled into loan 2.

[makkapakka69]

My scanner keeps making my laptop crash so cant upload anything! (I really need a new laptop :/)

 

I got full statements of account for both loans through my SAR. Loan 1 definitely does not show any refund being applied to the account. Loan 2 shows a refund of £311 being applied.

 

Have worked out that 17.12% of loan 1 was made up of ppi, and that when loan 1 was settled £1,749 of ppi was rolled over into loan 2.

 

% of loan 1 ppi in loan 2 payments = 7.07%

 

17.49% of loan 2 payments were ppi.

 

Have put all loan 1 payments, loan 1 roll over payments into loan 2, and all loan 2 payments into spreadsheet.

 

Totals are:

 

Monthly payment of ppi £5,955

8% simple interest £5,164

Total £11,119

 

Is there any other interest that needs to be added to this total?

 

MP.

[ims21]

No that is it.

 

You now need to look at the spreadsheet and determine what was loan 2 PPI for which you accepted an offer and then look to see what the total of loan 1 was and its implications in loan 2.

 

Then you can bring these figures to the attention of fos so that they ensure that the total redress for loan 1 is correctly paid.

[makkapakka69]

Then it seems too low! - Or do I need to also included the percentage of the amount I paid to settle loan 2 which was ppi? (Minus the early settlement rebate)

 

MP.

[ims21]

Yes you do.

 

Part of the settlement figure for loan 2 would have included some PPI from loan 1.

[makkapakka69]

Right, well that increases it higher then:

 

Totals are now:

 

Monthly payments of ppi £7925

8% Simple interest £6576

Total £14,501

 

If I add up altogether the payments that i've received from both loans and also include the extra that they are now offering, then once the deductions are made for income tax which they automatically take off, there is about a £120 difference.

 

So it looks like this extra offer is fair!

 

MP.

[ims21]

Yes it doesn't sound like it is far off.

 

£120 on a total of about £14,500....that is less than 1% out. Not bad I would suggest

[makkapakka69]

I agree!

 

Pity it took over 3 and a half years waiting at the FOS to get it finally sorted!

 

Thank you for your assistance ims21.

 

MP.

[ims21]

Oh it is well known that fos are pretty bad with timing.

 

Sadly an evil we have to live with as far as that organisation is concerned.

 

Keep us updated as to how things progress.