Direct Line PPI - Is this correct?

liberty_lily

Hi everyone,

I recently had a mis-sold PPI claim against Direct Line (RBS) upheld by the FOS. This was relating to a loan dating from the early 2000s which was paid off early after 20 months of a 5 year term.

As it was so long ago I don't know whether a partial PPI rebate was received at the time of early settlement although I do have the settlement figure that was paid.

The loan was for £8000 at an APR of 11.6%. Monthly instalments including PPI were £197.88.
The single premium PPI was £1094.53 and the monthly PPI element (I believe) was £24.85. The first payment was made on 1/2/00.
The settlement balance was £6458.13 which we paid 20 months into the loan term.

Today a cheque has arrived from Direct Line (RBS). The accompanying letter says the following -

'I am pleased to enclose a cheque for £1599.19 as full and final settlement of your complaint. This represents a refund of the premiums and associated interest you paid to date (£1015.13) and also interest on each premium of 8% net of 20% tax (£584.06).'

The bit I am not sure about is that referring to the 20% tax - is it correct for them to do this?

Any advice or opinions will be hugely appreciated, thank you!

Liberty_lily xxx

robbedofmymoney

liberty_lily wrote: »

Hi everyone,

I recently had a mis-sold PPI claim against Direct Line (RBS) upheld by the FOS. This was relating to a loan dating from the early 2000s which was paid off early after 20 months of a 5 year term.

As it was so long ago I don't know whether a partial PPI rebate was received at the time of early settlement although I do have the settlement figure that was paid.

The loan was for £8000 at an APR of 11.6%. Monthly instalments including PPI were £197.88.
The single premium PPI was £1094.53 and the monthly PPI element (I believe) was £24.85. The first payment was made on 1/2/00.
The settlement balance was £6458.13 which we paid 20 months into the loan term.

Today a cheque has arrived from Direct Line (RBS). The accompanying letter says the following -

'I am pleased to enclose a cheque for £1599.19 as full and final settlement of your complaint. This represents a refund of the premiums and associated interest you paid to date (£1015.13) and also interest on each premium of 8% net of 20% tax (£584.06).'

The bit I am not sure about is that referring to the 20% tax - is it correct for them to do this?

Any advice or opinions will be hugely appreciated, thank you!

Liberty_lily xxx

unfortunately the 8% simple interest is a taxable amount,
most banks do not deduct the tax and rely in you to inform the tax office, however some are now deducting this at source like they would on interest gained on a current/savings account and passing this onto the tax office.

its probably better this way so you don't get a tax bill later in the year.

i hope this helps.

cheers

liberty_lily

Hi robbedofmymoney,

Once again you have come to my rescue - thank you!

I suspected that might be the case as I seem to remember reading another thread where this had happened.

As you say better to have it done this way than get stung later by the tax man :eek:

Will get the cheque banked then!

Thanks again,

Liberty_lily xxx