old Sky Card PPI reclaim - Compound interest or dodging fair settlement?

[Shelley181146]

Hi there CAG family, hope you are all well?

 

I have been going through some paperwork for relative and are trying to reclaim old PPI from a Sky card, now owned by B/C.

I have collated all PPI amounts and entered onto a spreadsheet I used from previous claims.

 

Barclays have responded and although they state they have included compound interest, it appears to be way off. They have calculated PPI premiums together with charges and the compound interest amount added is closer to 27.29% of this total. This does not come close to the spreadsheet total (correct interest as per statements).

 

They have then added 8% statutory interest (this value includes extra 45 days simple interest) which totals more than the compounded interest amount above! Surely that can't be right?

 

The account was closed due to LVA which has also been fully repaid and settled. I maybe using the wrong spreadsheet for my calcs as the account was closed.

 

It has been many years since dealing with these calculations and i'm confused, would appreciate your thoughts.

[slick132]

Hi Shelley - hope you're OK.

 

Has the bank actually said they're paying compound interest. Maybe you could hide identifiers on the letter and post a copy of it here.

 

Can you confirm what spready you've used and is it one of the Site ones here - https://www.consumeractiongroup.co.uk/forum/showthread.php?330996-Latest-Spreadsheets-PPI-Claims-and-Charges-Claims-Dec-2011&p=3653267&viewfull=1#post3653267

 

Site Team DX is better with PPI than me but I do know you can't get the same with PPI like you did with reclaiming BC penalty charges.

 

[Shelley181146]

Hello Slick, Lovely to hear from you.

 

My scanner is disconnected at the moment, but yes. They have stated the following (verbatum)

 

How your refund has been calculated

A Refund of payments made by *********

B Refund of fees incurred due to PBP

C Refund of interest charged on PBP premium and fees

D 8% interest statutory compensation

E Income tac deduction

F Total = A+B+C+D-E

 

How we calculated your redress

Premiums

The premium refund is calculated by adding all the premiums paid since the inception of the PBP policy.

 

Compound Interest

Compound Interest is a term used to explain the type of interest being charged on the account

When a PBP Premium is charged it is added to the balance of the account and attracts interest charges at the purchase rate applicable at that time. Interest is also added to the balance and the following month any outstanding balance will also incur interest charges and so on.

We have calculated the interest charged on the PBP premiums throughout the term of the policy taking into account the effect of compounding and using the purchase interest rates charged throughout the term.

 

8% Interest

This is known as a 'simple interest' calculation - the reason for this is that we calculate 8% interest on the individual figure concerned for the number of days from the date of the charge until the date of the calculation. We do not 'annualise' this (for example in the way typical building society savings account operate) which is to calculate interest on interest at the end of the savings periods concerned.

 

We will pay a simple interest amount if the calculated cumulative total amount is greater than the original card balance in any month. If this occurs we will pay 8% on the difference between the two, and if there is a time difference between when the PBP policy was cancelled & when we make the offer.

 

The 8% interest amount is in line with the recommendations from the Financial Ombudsman Service (FOS).

 

Now, having put all the figures and dates into the CISHEET v101 the compound interest total is almost on the money (but they have admitted they are missing 2 statements) and have approximated it based on the spending pattern. I'm not too concerned about that, were only talking couple of pound. I originally thought it was way off but realised because the account had been closed a while ago, naturally I have to amend the end date. However, the 8% interest is way off and I think I’ve spotted why!

 

The name in the box of their breakdown is not the relative, so I suspect they have cut and pasted information into this and forgot to change all the relevant boxes. This (if they spot it) will have an impact on the settlement potentially, but if they don't spot it, can they come back at a later date and reclaim this? I suppose I should be upfront with them really?

[slick132]

Hi Shelley,

 

If you now think their calculations are similar to yours on your CISSHEET v101, let them make the refund.

 

If they refund too much s.69 int't, make sure the recipient sets aside the amount you think they may want to recover when they discover the error.