Please help (PPI/loan newbie) - Barclays/Barclayloan: do we have a case?

bizzybizzybee

Hi. I wonder if anyone can help me? First, I think this may be quite a long post — I do apologise! I shall try to be brief.

I am trying to help a very dear friend of mine who in May 2006, at the age of 68, went into his local branch of Barclays to arrange a loan.

He wanted to borrow £15,000 repayable over seven years so he could replace his windows. He was already a Barclays customer and wanted to take advantage of its widely advertised 6.8% interest rate.

His Barclayloan Plus agreement details this thus:

[FONT=Arial]                                                                                 [I]APR 6.8%[/I][/FONT]
[I][FONT=Arial]                                             Cash Loan                     Premium Loan[/FONT][/I]
[I][FONT=Arial]Amount of Loan                         £15,000.00        +          £3,758.15          =          £18,758.15[/FONT][/I]
[I][FONT=Arial]Total amount payable                 £18,912.60        +          £4,738.44[/FONT][/I]
[I][FONT=Arial]Monthly repayment                     £225.15             +          £56.41              =          £281.56[/FONT][/I]
[I][FONT=Arial]Number of Repayments              84                                 84[/FONT][/I]
[I][FONT=Arial]Your monthly repayments will start two months after your loan is drawn and must be paid at monthly intervals.  Your loan will be interest free for 1 month, after which interest will accrue at the contractual interest rate and your first repayment will be due 2 months after the loan is drawn.[/FONT][/I]
[I][FONT=Arial]Term                                         85                                 85[/FONT][/I]
[I][FONT=Arial]Other Financial Information[/FONT][/I]
[I][FONT=Arial]                                             Cash Loan                     Premium Loan[/FONT][/I]
[I][FONT=Arial]Total charge for credit                £3,912.60                      £980.29[/FONT][/I]
[I][FONT=Arial]Interest rate                   6.830% p.a.[/FONT][/I]

Upon receipt of the agreement, he queried the ‘premium loan’ figures and was eventually told (by in branch counter staff) that this was PPI. He had not asked for PPI, nor was he made aware that PPI was being arranged — indeed, at 68 years of age, his income (a pension) was fixed and highly unlikely to change, so there was little, if anything, for a PPI policy to protect.

He made repeated requests for the PPI element of the loan to be stopped and eventually achieved this some ten months later after once again visiting his branch of Barclays. The member of staff who assisted him was helpful and assured him that she had removed the PPI as he had requested. Days later, he received what he thought were the revised terms of his existing loan; however, the document was in fact a NEW loan agreement which replaced the original Barclayloan and although the PPI element had been removed, the previously agreed interest rate had been increased. At no stage had he been advised that such would be the case.

He wrote to Barclays to complain about this, pointing out that he had not asked for a new loan agreement, only the cancellation of the PPI which he had not asked for, nor been advised he was getting when he took out the original loan. Barclays replied that the terms of the original loan state “...that a request to cancel the insurance premium on a loan is deemed as a request to cancel the entire agreement.” However, we have scoured both of his Barclayloan agreements, but can find no such or similar terms.

I have therefore been scanning this and other consumer forums in search of any helpful information about others’ experiences and have noted that often, when referring to Barclayloan agreements, the following wording is quoted:

“You may end this agreement at any time, if the cash loan, premium loan or barclayloan protection is ended then the whole agreement will end. You may then take out a new loan application for any outstanding balance and for any further money that you require. We will assess any new application on the day it is made.”

However, there is no such wording in the terms of either of my friend’s Barclayloan agreements. There is reference to sums payable if the agreement is ended early — should the borrower wish to settle the loan in full after 21, 42 or 63 months for example, but otherwise, nothing that either of us can see.

If anyone can advise quite what his position is and how he should best proceed, I should be so, sooo grateful.

Once again, I do apologise for the length of this post — thanks so much for reading it!

marshallka

Hi bizzybizzybee, it seems that the PPI was never going to help your friend anyway and it was most likely to have been missold to him. I would make the misselling complaint in the usual way in that the PPI served no purpose as it was not protecting anything (as he was a pensioner) and then they should put him back into the position as if he "never" had the PPI. This would mean that the second loan would have not existed and the interest rate they gave him would not have existed. I would make sure that they KNOW that you KNOW this too as they may give him a refund of the PPI and not take this into account.

There is a guide here
http://www.moneysavingexpert.com/reclaim/ppi-loan-insurance

You send the letter (perhaps make up your own with the template as a guide) and then give them 8 weeks for a full and final response. He should not have been charged an higher APR for just cancelling the PPI and this needs adding to your complaint. You would be free to use FOS too if they do not see things your way and I am quite confident that FOS would. Always keep all correspondence recorded delivery for proofs and date etc.

Good luck

di3004

Hi there

So sorry to hear of your friends issues and hope they are resolved soon.

May I ask if they refunded what your friend has paid in PPI, when cancelled?
If not then I would request to have this refunded with the interest and 8% interest of being deprived if his money and he have been out of pocket due to this.

They should never had sold the PPI in the first place, due to your friends age, so there is a good case here.
http://www.moneysavingexpert.com/reclaim/ppi-loan-insurance
This link above is useful with the guidelines of reclaiming, and template letters, a checklist of mis selling reasons, they have 8 weeks in full to respond.
I would mention that even though the policy was cancelled as your friend was not eligible to make a successful claim and it does not protect the age side of things either, that they refund what have been paid (as stated above).

Then maybe in regards of the rates, write back and tell them your not happy with this decision, because if the PPI was not sold in the first place on the original loan the rate would not have been affected, and believe this is wrong now they have changed this due to cancelling the previous loan, where your friend is still paying out more for this loan.
If they do not resolve in your friends favour then I would go to the financial ombudsman service (FOS) to complain, but wait for a final decision.
The same rules of 8 weeks apply.

Post all your letters by recorded delivery - for your proof of posting.

Good luck with this, please keep us posted.;)

di3004

Sorry Marshallka, I missed your post.;)

bizzybizzybee

Thank you so much Marshallka and di3004 - your responses are so helpful and encouraging. I have printed and shown them to my friend and today, we have written his letter to Barclays and mailed it via recorded delivery. Without your replies to my post, I should never have been able to persuade him to do this and he has asked me to relay his thanks too - he is so very grateful.

I honestly believe that sites and forums such as these which enable people to get the advice and support of others with similar or identical problems are absolutely the best thing to come out of the internet.

Once again, thank you both so much for your kind help and support - it really has made such a difference.

marshallka

bizzybizzybee wrote: »

Thank you so much Marshallka and di3004 - your responses are so helpful and encouraging. I have printed and shown them to my friend and today, we have written his letter to Barclays and mailed it via recorded delivery. Without your replies to my post, I should never have been able to persuade him to do this and he has asked me to relay his thanks too - he is so very grateful.

I honestly believe that sites and forums such as these which enable people to get the advice and support of others with similar or identical problems are absolutely the best thing to come out of the internet.

Once again, thank you both so much for your kind help and support - it really has made such a difference.

You are welcome Bizzybizzybee, I hope it all works out in your favour.

di3004

bizzybizzybee wrote: »

Thank you so much Marshallka and di3004 - your responses are so helpful and encouraging. I have printed and shown them to my friend and today, we have written his letter to Barclays and mailed it via recorded delivery. Without your replies to my post, I should never have been able to persuade him to do this and he has asked me to relay his thanks too - he is so very grateful.

I honestly believe that sites and forums such as these which enable people to get the advice and support of others with similar or identical problems are absolutely the best thing to come out of the internet.

Once again, thank you both so much for your kind help and support - it really has made such a difference.

With pleasure, fingers crossed and please keep us posted, cheers.;)

bizzybizzybee

Sincere and profuse apologies for the length of this post - it is going to take a fair bit of explaining, I'm afraid......

After all the helpful advice and kind requests to keep you updated, I’m back with some good news……… the FOS upheld the claim, stating that Barclays must restructure the loan as it would have been from the outset without the PPI and, of the difference between the two loan amounts, it must refund that which has already been paid (+ interest of 8% pa) and adjust the number and amounts of any outstanding (future) repayments so they are the same as they would have been had the loan been properly structured from the outset without the PPI.

My friend was delighted and wrote to accept, seeking confirmation from the FOS that the loan referred to was in fact the first, original loan of April 2006: My original loan, taken out in April 2006 for £15,000 @ 6.8% APR is the loan to which Barclays applied PPI without my knowledge. I had been re-paying this loan at £281.56 per month (£225.15 + £56.41) for ten months (£2,815.60) when Barclays agreed to cancel the PPI. I do not understand why Barclays ALSO cancelled and replaced the original loan of £15,000 over 84 months with a new loan of £14,400 over 72 months — it was not at my request.
He was also very clear when he applied (in person) for the first loan that he was already 68 years of age and therefore had no need or desire for a PPI policy.

The FOS replied saying Barclays had been contacted and had agreed to pay the difference between (£14,400 @ 7.0% APR over 72 months) £17,701.92 and (£14,400 @ 6.8% APR over 72 months) £17,476: £225.92, in addition to the PPI premiums redress.

My friend replied immediately, saying: If Barclays is now required to put me “back in the position I would have been in if the original loan was taken out without PPI cover”, then should I not receive the difference between the £15,000 @ 6.8% APR over 84 months that was agreed in 2006 and the £15,000 @ 6.8% APR + PPI @ 6.83% that I paid until May 2007 plus the £14,400 over 72 months @ 7.0% APR that I have been paying since May 2007? I should be so grateful if you would confirm whether my understanding is correct or clarify the position if it is not.
Receipt of this letter has been acknowledged, but a response is still awaited.

In the meantime, Barclays has written:
Having reviewed your complaint, whilst I am satisfied your loan requirements were assessed in accordance with our standard procedures the documentary evidence to support this is unavailable. I am therefore upholding your complaint, and in line with the FOS’s recommendations we will arrange to place you into a position which is broadly the same or better than you would have been in had you taken your original loan without PPI.
I have credited your account £1,604.92. This comprises the original PPI premium of £3,758.15 (less the early settlement refund of £2,843.41 received when your loan was closed in April 2007) plus interest of £248.14 paid on the Premium Loan. It also includes 8% interest on the monthly premiums paid which amounts to £304.74. This figure also includes 8% interest on the monthly premiums since closure of your loan.
As you have consolidated the loan mentioned into a further loan we are making an extra payment of £137.30 to cover additional interest incurred, for the refinanced Premium Loan.
I trust this information is to your satisfaction.

Now, perhaps we are being dim, but there are a number of points upon which we feel inclined to seek clarification; specifically, we note Barclays’ letter omits the following:
§ any mention of the £225.92 stated in the FOS’ latest letter;
§ any mention of the outstanding balance of the loan — restructuring, reduced or altered payments….. surely, we should expect the remaining repayments to be affected?
§ workings to explain how the stated sums were arrived at;
§ dates showing the period to which the 8% interest calculation applies.

But perhaps we are now being picky? Frankly, we both feel quite puggled by all the figures and able to make little sense of them…… what should we do next?

I do apologise for the length of this post — huge thanks if you are still with it! If you have any advice for us, I should be so grateful. Thanks so much for reading to the end!

roonaldo

bizzybizzybee wrote: »

My friend replied immediately, saying: If Barclays is now required to put me “back in the position I would have been in if the original loan was taken out without PPI cover”, then should I not receive the difference between the £15,000 @ 6.8% APR over 84 months that was agreed in 2006 and the £15,000 @ 6.8% APR + PPI @ 6.83% that I paid until May 2007 plus the £14,400 over 72 months @ 7.0% APR that I have been paying since May 2007? I should be so grateful if you would confirm whether my understanding is correct or clarify the position if it is not.
Receipt of this letter has been acknowledged, but a response is still awaited.

I have looked at your post numerous times to get my head around it. The refunds seems correct. You seem to be raising two points/issues here that have been confused into one.

1) the Ppi refund (seems ok)
2) the loan restructure (may not be ok)

The bank has given a refund of premiums and interest, which is what they are required to do. As the loan had PPI built in, it was restructured at 7% (which differs from the original loan)

They have been given a refund of the premium of the PPI minus the amount of your previous refund taken off, plus interest, plus 8% interest, then a little more.

KarnamKrishnan

If you think you may have been mis-sold PPI, use a PPI calculator to get an estimate of the amount of money you might be owed