Loan Mistake

actionjackson

Hi,

I would appreciate some advice on how to settle a compensation offer provided by Sainsbury's loans.

Background.... I had taken out a 7 yr loan with Sainsbury's approx 3.5 yrs ago. No missed payments or problems during this period.

Last month i applied for a second (new) Sainsbury's loan to pay off some credit cards (details of amounts/companies provided to Sainsbury's during application). The application was accepted and was informed a cheque would be sent to me with 21 days.

After 4 weeks of waiting for the money to arrive, i contacted Sainsbury's to find out if the cheque had been sent. After much waiting on the phone, i was advised a payment of £362 had been paid into my bank account 2 weeks ago. I had no idea where this figure came from but was advised that this was the the remaining sum of money left after settling my original Sainsbury's loan!

I immediately told her that i didn't take out a higher interest loan to pay off a lower interest loan and that i informed them at the time of application that i wanted to pay off the credit card balances i advised them of. She told me that the credit agreement i signed stated i wanted to pay off the first loan (i can't recall the correct terminology). I was 100% sure it didn't because i went through the agreement with a fine tooth comb. I asked the lady to hold the line whilst i grabbed my copy off the agreement but when i returned she had hung up!! What i can say is the agreement signed has no mention of paying off the first loan.

I rang straight back and got through to a very helpful chap who looked through the paperwork on their system and noticed that the underwriter had manually edited the part about paying off the first loan. Why i asked..... the man said he had no idea and he should never have done this. He also confirmed that the details i provided ref paying off the credit cards were on the system. He was extremely sorry.

I was then told the first loan had been settled with the second loan and the left over sum (£362) had been credited to my bank account. He also said that 1 x installment for the first loan was on it's way to my bank account because my direct debit came on the day the loan was paid up. What a mess i said.

So i was told the only way to get the first loan up and running again was to re-pay the credited installment & pay next months installment which i have done. I then had to re-apply for the new loan which i did, and the funds were received (minus the £362 already received) today.

But thats not the end of it I'm afraid, i received a letter today saying that under the Consumer Credit Act 1974, they are required to provide me with notice of arrears totaling 2 x payments on the first loan. Like i said earlier i haven't missed a payment in 3.5 yrs so i presume they are referring to the payment i was credited and something else that I'm unaware of??? I will call in the morning to find out.

I have since been contacted by customer relations who have made a sincere apology for the error and have offered compensation for all interest incurred on the credit cards since the second loan application. They have also said they will compensate me for the distress caused.

I have no idea what figure i should ask for or how to calculate the extra intrest incurred. I'm also very concerned about this letter and the impact on my credit reference file as i have never missed a payment of any sort in the last 13 yrs. These loans total £35k so we are talking about serious sums of money.

What should i do from here?

Thanks & regards
Neil

opinions4u

1. You should not be out of pocket.
2. Your credit file should not reflect anything derogatory as a result of this (including additional searches).
3. A goodwill payment is appropriate.

1 - put you back in the position you were in - same balance, remaining term and rate plus compensation for cost of phone calls and time (typically £10 an hour)
2 - ideally nothing showing at all
3 - I'd suggest somewhere around the £100 mark.