Loan refinanced without PPI but PPI "kept" from original loan

Claudie

Oh I am confused - any advice welcome.

I am trying to help a relative claim back unlawful bank charges and have hit an unknown when reviewing her paperwork. I hope I can explain this properly!

In March 2005 she took out a loan for £6000 - added to this was an additional £1340 for insurance so in fact she borrowed £7340 - she was to repay £171 per month for 60 months - she paid this for 9 months then hit trouble and paid £50 a month for 4 months.

In July 2006 she finally phoned Lloyds for advice (she is completely financially naive and was still a teenager at this point!). Lloyds offered to reduce her monthly payments to £70 if she refinanced with them which she did. Sadly though she signed all papers without even thinking about it - in fact her new loan is for a staggering 144 months!

The balance carried forward from Loan 1 was £6035 - she added another £1200 to pay off an unauthorised overdraft so the new loan is now for £7300 (almost back where she started even after all those payments).

What confuses me is that the £6035 brought forward from Loan 1 includes the PPI front loaded on that loan so to me, she is in fact paying PPI. She telephoned Lloyds last week and they told her that when she took out this new loan in July 2006 they didn't add PPI as she did not request it so she is not covered and does not have PPI.

So what happened to the original £1340 for Insurance? There was no rebate of PPI when she took out Loan 2 so in my mind that is hidden in Loan 2. If you allow even £22 a month for PPI from Loan 1, and she only had that loan for 12 months, shouldn't £1070 therefore not be needed for PPI and be refunded?

I am so sorry this is so long but I am trying to get my head around it and I don't know what to send to Lloyds. She has tried phoning them but they just said she is not paying PPI anymore. She asked for a statement but that does not show a rebate. She asked them to speak to me on her behalf but they won't do this until we can both visit a branch and sign authorisation...

Any thoughts or suggestions really appreciated.

Astaroth

PPI can get very confusing on consolidation loans. You need to speak to Lloyds to find out what has happened to it.... I know when my misses worked with handling PPI claims that with some consolidation loans the original PPI would continue to cover the original loan but not the "extra" but this depended on if the PPI was front loaded etc.

Claudie

Thanks for that. Lloyds told her she does not have PPI so it is v odd that they would roll it into Loan 2. Trouble is they won't speak to anyone but her and she isn't confident enough to ask the rigt questions.

She wrote them a letter authorising me to have access to her account but they told her I must visit the branch first with proof of my ID. Talk about making it difficult...

Astaroth

Unfortunately companies are caught between trying to give good service and being sued for breach of the Data Protection Act... banks are traditionally risk adverse and so tend to cover the !!!!!! more than a non-financial services company may.

Clearly, you/ her need to speak to them and clarify the situation.