Capital One - going to court

[Splashy]

During a telephone conversation with one of their analysts they stated that column T should be compound interest. I questioned why the "compound interest" went down as well as up. He said that was because of the different number of days in the month.

 

If you understand anything about compound interest then you must understand that the compound interest CANNOT go down.

 

They are NOT paying compound interest.

[caro]

Certainly looks that way.

 

It is a risk going to court but take a look at HMRC v Sempra Metals.

[Splashy]

Here is the latest.

 

"We have sent you a spreadsheet setting out the hypothetical reconstruction of your account month on month, and the calculation of redress accordingly.

We have also invested a considerable amount of time in explaining to you how the calculation is performed.

We have explained that calculation of PPI redress is complex, as is the software we use

and which must account for numerous customer situations, actual and hypothetical.

It is not as simple as disclosing a ‘formula’.

We believe we have done all we can to assist you in understanding our approach."

 

The calculations they sent me included an Offer of Redress.

This included interest up to the present day.

Now Capital One are saying that they will not honour this offer but instead stick to their initial offer.

 

Whilst I think that this is a mistake it really gets my back up to think that we have been negotiating over the last 2 months

using calculations which they now say are not valid and they will not stick to.

 

To me it is worrying that they cannot supply me with the formula used in calculating my redress.

In effect I have to 100% trust them.

 

Then we have more ...

 

"It seems to me you continue to misunderstand the difference between our approach (which is in line with FOS guidelines) and your own,

and in particular what we mean when we say in our offer letter that ‘Any interest refund is compounded over time,

which means we add interest onto the interest we refunded for the previous month’, or at least the way in which this is achieved.

 

 

You believe that the figure in column T should be compounded so as to increase month on month, without reflecting any activity on your account.

 

 

We have already explained that this is over-simplistic, and that the compounding we describe in our letter

is achieved by reconstructing your account balance month by month as it would have been had you not purchased PPI.

 

 

So, for any given month, we take the previous month’s reconstructed balance and strip out the monthly premium,

interest charged on the premium and any charges added to your account as a result of the PPI;

we also account for payments to your account (stripping out any surplus payments).

 

 

The new reconstructed balance is then carried forward to the next month, where the same exercise is repeated, and so on.

It is through this iterative approach that you see the effect of the compounding;

put simply, the reconstructed balance is rolled over month by month,

showing the cumulative effect of the refund but also accounting for payments to your account.

 

 

Column T simply sets out the associated interest calculated month by month on the difference between the actual and reconstructed balance

i.e. we ‘calculate and refund the difference between the amount of interest that was actually charged

and that which would have been charged if PPI and any charges caused by PPI had not been added to the account’ as stated in our offer letter.

 

 

Because the reconstructed balance on which the calculation is based reflects any previous refund of interest,

we do (as we say in our offer letter) add interest onto the interest we refunded for the previous month.

 

Whether or not this accords with your own view of how compounding should apply,

I can assure you our approach is in line with FOS guidelines.

 

 

We have previously referred you to the relevant guidance, and you will therefore be aware that FOS consider it good practice

in a situation where a customer has habitually made the minimum monthly payment to their account

to hypothetically reconstruct the account balance without the cost of PPI and any interest and charges paid as a result of PPI

being included on the account (as we have explained we do month by month) and refund the difference

and to consider the impact the reconstructed balance would have had on the payments made to the account,

awarding 8% simple interest to compensate for the loss of use of any surplus (again, as we have explained we do).

 

 

Your own calculations provide for you to receive sums over and above that provided for by FOS guidance

and would go beyond putting you in the position you would have been in had you not purchased the PPI by refunding interest you never in fact paid. "

[dx100uk]

I can see nothing wrong with that explanation.

 

 

you cant claimback or expect back what you have not already paid in PPI interest compounded or not.

 

 

so unless you've paid back 12.5 * £900 or your outstanding balance is running at that figure

 

 

I cannot see you logic they are short changing you

 

 

dx

[Splashy]

Than that means that the FOS running spreadsheet is incorrect, as is the other CISheet (Compound Interest) Sheet.

[dx100uk]

I don't know we've not seen how you've inputted your data into it

and if the first red figure is the correct starting balance

 

 

dx

[Splashy]

I have accepted the Capital One offer but stated that I would only do so if they allowed me to refer the case to FOS (no barring due to time).

 

I was fighting a losing battle when they would not/could not give me the calculations used and their threat to expose me to large costs incurred whilst trying to explain lots of hypothetical cases rather worried me. I did point out that I would rather they spend their time explaining MY calculations but apparently they are not able to do so. I think this is because they put blind trust in their VERY complicated software and don't really know how it does the magic. They are however certain that it is FOS and FCA approved.

 

What I am 100% certain, and was confirmed by one of their analysts, is that they are not paying "interest on interest" as they stated in my redress offer. I will be contacting FOS and sending them the spreadsheet that Capital One sent me along with details of how they have underpaid me and I rather suspect quite a few other people.

[caro]

Send them your calculations too splashy. I think you've done the right thing purely due to the risk of costs, as I'm not convinced by their calcs. Good idea to get permission to proceed to fos after payment. Well done.

[Splashy]

I attach my FOS Running spreadsheet using their values. It is obviously quite clear that they are NOT using compound interest at ANY time, regardless of PPI balance.

 

I will be forwarding this to FOS along with a transcript of the telephone conversation that I had with their analyst where he stated that they should be using compound interest and trying to tell me that the compound interest went down because of the number of days in the month. Very obvious that they don't actually know how to calculate the redress, they just rely on the software.

[Splashy]

Hi Everyone,

 

Just thought I would give you an update.

 

After being threatened that my legal costs would be very high since they would be using expensive expert witnesses

I relented and accepted their offer.

 

 

This was on the condition that I could refer it to FOS.

They assured me that FOS were fully aware of their method of calculations and that they were fully confident in their calculations.

 

The whole process really took it out of me and I did nothing, promising myself that I would get round to it at the weekend. Lots and Lots of weekends went past.

 

Then I had some bad news and had to find a utility bill to use as proof of identity.

I started to go through the stack of unopened moaning mail and opened a letter from Capital One.

 

This letter explained how the process of calculating PPI was very complicated.

I knew this since they were not able to calculate it correctly as I tried to explain to them over many, many, hours of recorded conversations.

 

BUT .. They had realised that they had been miscalculating and were sending me a cheque and putting money on my card.

Guess what ... this amounts to the amount that I claimed that they had underpaid in the first place !!!!

 

All cards seem to use the same software to calculate PPI and they don't seem to understand how it works so therefore I am eagerly awaiting a similar letter from other companies that have tried to under pay.

 

I will NEVER leave a letter from a card company unopened again. This could mean a fresh start for me and I am very happy !!

 

I am thinking about claiming back my legal costs from Capital One.

I paid over £1000 and I think that they knew at the time that I was right

but used their financial muscle to bully me into accepting.

 

 

I believe that they knew since in a telephone conversation with their Analyst he said that a certain column was compound interest.

I said that it could not be since it went down as well as up.

He explained that this was due to the different number of days in months.

Obviously this was incorrect since a sum of compound interest cannot go down.

 

They caused me a massive amount of stress and I am wondering whether there is any precedent for claiming back court costs and some recompense for their attempt to mislead myself and the court.