First Plus Post Cash Back Claims

Niggly_2

I have started a new post for those who have had or will get offer letters and who have had the cash back already.

I have taken their offer apart and looked at a number of offer letters. Their offer my fellow forum members is falling foul of the FOS guidelines and hence they have been reported. The complaint is with the FOS and has been passed up to a senior level. This was due to a number of First Plus customers who with guidence have taken up the issue.

I will be sending a letter to the FOS Whistle blowing on their attempt to make as much as they can out of a situation which is complex.

The point of the post is to say that we are attempting to get the FOS to request FP stick to their DISP guidence notes. Especially :
DISP App 3.8), the firm should, as far as practicable, put the complainant in the position he would have been if he had not bought any payment protection contract.

DISP App 3.7.4 Evidential01/12/2010
Additionally, where a single premium was added to a loan:

(1) for live policies:

(a) subject to DISP App 3.7.5 E, where there remains an outstanding loan balance, the firm should, where possible, arrange for the loan to be restructured (without charge to the complainant but using any applicable cancellation value) with the effect of:

(i) removing amounts relating to the payment protection contract (including any interest and charges); and

(ii) ensuring the number and amounts of any future repayments (including any interest and charges) are the same as would have applied if the complainant had taken the loan without the payment protection contract; or

As you know you will have recieved cashback on your loan. What you wont know is that the element of the cashback FP had to pay you (£cashback less your first 5 years contributions = FP cost) is staying on the loan after they have taken off the refund for ppi.

Some of you might say well fair enough you have had the pyment. However they are charging interest on this for the remainder of the loan doubling and tripiling the amount.

Obviousley this has happened due to the ppi policy being mis-sold so they cant as the rules above say add on extra interest. The effect of this is to increase the new monthly payments on your acount by at leat 5% per month.

I will keep you posted but obviousley this will take some time. I am not accepting their offer when I get it and will fight to the bitter end.

I do not blame people for wanting to just take whats offered thats up to you. I hope through this action FP will be forced to open up every case thats been settled and redress them properly.

Who knows if we will win or not but I know fundementally FP are guilty here of profiteering of their own mis-selling and I and others will not stand for it

I will post up the whistleblowing letter when done.

debasur

Nice one Niggly..
Wow, i`m glad your on our side

src007

FirstPlus usually provide three options when offering a PPI refund after the cashback has been issued.

Really to fully follow the FOS guidelines the consumer would have to return the cash-back IN FULL to FirstPlus.

This is because to place you in the position you would have been in had the PPI never been sold - would mean a return of the cashback (as you only get the cashback as a result of taking the PPI).

Once the cashback is returned, FirstPlus could then pay back the monthly PPI you already shelled out for and remove the PPI going forward.

Understandably many people have already spent the cashback, so it would be wrong for them to insist on it being returned!

For this reason they suggest options that aren't in line with the FOS guidelines.

Maybe I've missed something you're saying but I can't see anything wrong with FirstPlus doing this!

Firstplus usually include the interest paid on the PPI as part of the refund whichever option you pick. (although in the past they didn't include 8% compensation interest that FOS recommend).

Niggly_2

src007 wrote: »

FirstPlus usually provide three options when offering a PPI refund after the cashback has been issued.

Really to fully follow the FOS guidelines the consumer would have to return the cash-back IN FULL to FirstPlus.

This is because to place you in the position you would have been in had the PPI never been sold - would mean a return of the cashback (as you only get the cashback as a result of taking the PPI).

Once the cashback is returned, FirstPlus could then pay back the monthly PPI you already shelled out for and remove the PPI going forward.

Understandably many people have already spent the cashback, so it would be wrong for them to insist on it being returned!

For this reason they suggest options that aren't in line with the FOS guidelines.

Maybe I've missed something you're saying but I can't see anything wrong with FirstPlus doing this!

Firstplus usually include the interest paid on the PPI as part of the refund whichever option you pick. (although in the past they didn't include 8% compensation interest that FOS recommend).

Only 2 options now

N

Niggly_2

Here is a copy of a letter going into FOS re an example where customer has taken the cash back. Feel free to use it and substitute your own figures.

Reason for complaint
I am writing to make you aware of and complain that First Plus, having upheld my recent complaint, is not following the guidelines set down by yourselves. Specifically I believe they are not following;

DISP App 3.8), the firm should, as far as practicable, put the complainant in the position he would have been if he had not bought any payment protection contract.

DISP App 3.7.4 Evidential01/12/2010
Additionally, where a single premium was added to a loan:

(1) for live policies:

(a) subject to DISP App 3.7.5 E, where there remains an outstanding loan balance, the firm should, where possible, arrange for the loan to be restructured (without charge to the complainant but using any applicable cancellation value) with the effect of:

(i) removing amounts relating to the payment protection contract (including any interest and charges); and

(ii) ensuring the number and amounts of any future repayments (including any interest and charges) are the same as would have applied if the complainant had taken the loan without the payment protection contract; or

Background to complaint

On applying for the loan I was sold a PPI policy which was paid for by a Single premium of £15,800. The principle loan was £79500 over 15 years at 9.4% originally costing £809.18 per month. The monthly premium for the PPI was £161.27 per month.

As a benefit of the loan terms and conditions I was told I would receive £15,800 as long as the loan wasn’t in arrears after 5 years and a claim was not made on the policy. I was under the false impression that First Plus would settle the cash back as a benefit of the loan and the PPI policy would be terminated where upon I could arrange another policy or take the cash back payment. I thought that the monthly premiums would stop. At this point then I had paid £9676.2 in monthly premiums and understood the remainder of the cash back £6123.8 was being paid by First Plus as a bonus for not claiming against the policy.

After 5 years the PPI policy stopped and FP sent a cash back payment of £15,800 as outlined under the terms and conditions of the loan. What they had not confirmed originally and the main reason that my claim was upheld was that the cash back payment was actually a loan to pay for the PPI. The interest on which would continue to the end of my loan term.

What this means now is that FP consider the cash back as a loan against the policy which of course would not have existed and should not exist if they follow the guidelines outlined above.

This leaves the unsatisfactory position whereupon First Plus due to the mis-sold policy has increased the loan from £79500 to £95300.

In order to redress the upheld claim they have sent some calculations from which I can choose from 2 options. I have forwarded these calculations to you.
Comment on the redress figures

My original loan figures meant that I would pay with the PPI £970.45 X 180 = £174681
Without PPI I would have paid £809.18 x 180 = £145652.4
The total cost of the PPI is £29028.6

FP have demanded that the cash back be taken into account as part of the PPI redress because they say it was wholly linked to the PPI policy. In fact it was sold to me as a benefit of the loan and the cash back is covered under the terms and conditions of the loan and not the terms and conditions of the PPI policy itself which was arranged through a subsidiary company Barclays Insurance Dublin.

First Plus has calculated that my outstanding balance with the PPI is £74,350.21 which I believe is a settlement figure. There is no explanation of how this figure was arrived at it just states current loan balance with PPI.

They have calculated that the PPI premiums paid are £11.301.85 and the interest attributable to the PPI policy is £ £7,859.44 so a total refund of £19161.29.

The first Option allows the PPI premiums to be paid as a refund cheque of £11301.85 plus a further cheque for £1,979.47 the 8 % interest payment. The remaining £7859.44 is then taken off the outstanding balance.

The explanation states “We will refund the monthly payments made towards the PPI to you and then apply the interest paid on the PPI to the loan balance. As the cash back element of the PPI product has already been claimed, this may result in an increase of your loan balance and repayments.”

H is the loan balance with PPI; they have credited the account with the PPI interest and then debited the PPI premiums thus increasing the fund to £77792.62!


The second option allows me to refund the PPI premiums payable and the interest on the PPI to the loan balance. There explanation for option 2 is to “credit the monthly payments made towards the PPI to the account and then apply the interest paid on the insurance premium plus the full premium to your loan balance. This will result in a reduction of your loan balance and monthly payments which will be greater than option 1 but no immediate refund will be made”

This should mean that the PPI premiums and interest are taken off the account but has you can see the current loan value H has only had the PPI interest taken off it F. This contradicts the explanation.

Even with the confusion and contradiction of the above 2 options, if we assume that the options are indeed correct the DISP guidelines above clearly state that I should be put back in a position as if the PPI policy did not exist.

This would mean that any future payments would not include extra interest or charges associated with the PPI policy. However as you can see even the second option does not put me in that position.

My future payment would be £906. I currently pay £1009 per month of which £168 is for the PPI policy.

I would expect my future payments to be £1009 - £168 = £841. Instead even after the PPI payments and the interest of £19161.29 have been taken off the policy I am expected to pay £65 more per month, that’s £7345 more over the term of the policy.
In summary the original cost of the loan with PPI, taking no account for the higher costs I have paid since then due to Interest rate rises, is;


My original loan figures I would have paid £970.45 X 180 = £174681
My original loan figures without PPI £809.18 x 180 = £145652.4
The cost at 57 months was £970 x 67 = £64990
The cost after a further 113 payments at £906 = £102378

Total cost after redress is £167368 some £21715.6 higher than the cost without PPI
The cash back of the policy was £15800 I would be refunding the redress of £19161.29 so again I fail to see how a payment in compensation which is larger than the cash back benefit sees a situation of whereby I pay an increased cost greater than as if PPI did not exist.

I would be grateful if you could ascertain why this situation has arisen and ask FP to recalculate the figures so the cost of the PPI policy and its cash back has no greater cost to me on future payments to them.

n:cool:

magpiecottage

Sorry - I do not follow this.

You say you paid a single premium of £15,800 but you also say you paid a premium of £161.27 per month.

It cannot be both, it must be either/or.

Niggly_2

magpiecottage wrote: »

Sorry - I do not follow this.

You say you paid a single premium of £15,800 but you also say you paid a premium of £161.27 per month.

It cannot be both, it must be either/or.

The £15800 was the single premium which paid for the PPI policy. The £161.27 is the monthly interest payment on it. FP call this the premium paid towards the PPI in the redress figures calculated.

Interestingly they quote that PPI premiums paid are £11.301.85 (67 months) yet the PPI interest apportioned to the PPI as £7,859.4. This is another thing FP have been asked to explain.

:beer:N

src007

I find getting my head around a PPI refund after the cashback has been issued is an utter nightmare! What Firstplus offer certainly confuses me.

Niggly wrote: »

The monthly premium for the PPI was £161.27 per month.

After 5 years the PPI policy stopped and FP sent a cash back payment of £15,800

Niggly wrote: »

What this means now is that FP consider the cash back as a loan against the policy which of course would not have existed and should not exist if they follow the guidelines outlined above.

FP have demanded that the cash back be taken into account as part of the PPI redress because they say it was wholly linked to the PPI policy.

If PPI wasn't sold you wouldn't have had the cashback. Thats just a fact. I think FirstPlus are correct to take the cashback into account.

Niggly wrote: »

They have calculated that the PPI premiums paid are £11.301.85

The trouble is that the total you have recieved as cashback is £15,800. If I understand you correctly you've paid £11,301.85 so far for PPI and 8% interest on that is £1,979.47 (total of £13,281.32).

In theory to place you in the position you would have been in now had no PPI been added, would mean you paying FirstPlus £2,518.68! Then the monthly PPI payment could be completely removed going forward leaving the loan in the same position.

Think what outrage there would be if FirstPlus upheld complaints and then asked for thousands of pounds worth of payment from their customers.

It seems to me that FirstPlus make alternative offers because otherwise they'd have to ask for the cashback to be returned (which wouldn't be in the best interest of the consumer).

Without having all the figures and details of the offer I can't say I can fully explain their alternative offers. I wouldn't want to say I'm 100% correct but I think -

Option One

They make an offer that means the consumer can keep both the cashback and get a refund (e.g. you have your cake and eat it) however to account for this the loan balance ends up much higher.

Option two

The full refund goes to the loan however as you have had more cashback than what you've paid, again the loan balance isn't adjusted to quite what it would have been.

Of course I wouldn't want to say for sure that you don't have a case about whether this has done correctly. I'm just trying to explain why FirstPlus might have made those offers.

Niggly_2

src007 wrote: »

I find getting my head around a PPI refund after the cashback has been issued is an utter nightmare! What Firstplus offer certainly confuses me.





If PPI wasn't sold you wouldn't have had the cashback. Thats just a fact. I think FirstPlus are correct to take the cashback into account.



The trouble is that the total you have recieved as cashback is £15,800. If I understand you correctly you've paid £11,301.85 so far for PPI and 8% interest on that is £1,979.47 (total of £13,281.32).

In theory to place you in the position you would have been in now had no PPI been added, would mean you paying FirstPlus £2,518.68! Then the monthly PPI payment could be completely removed going forward leaving the loan in the same position.

Think what outrage there would be if FirstPlus upheld complaints and then asked for thousands of pounds worth of payment from their customers.

It seems to me that FirstPlus make alternative offers because otherwise they'd have to ask for the cashback to be returned (which wouldn't be in the best interest of the consumer).

Without having all the figures and details of the offer I can't say I can fully explain their alternative offers. I wouldn't want to say I'm 100% correct but I think -

Option One

They make an offer that means the consumer can keep both the cashback and get a refund (e.g. you have your cake and eat it) however to account for this the loan balance ends up much higher.

Option two

The full refund goes to the loan however as you have had more cashback than what you've paid, again the loan balance isn't adjusted to quite what it would have been.

Of course I wouldn't want to say for sure that you don't have a case about whether this has done correctly. I'm just trying to explain why FirstPlus might have made those offers.

Its simple. FP have made a cashback payment which is added to the loan. The customer is agreeing to payback £19000 + off the loan which is the redress after cashback is accounted for. They still want to charge the customer £60 plus per month over and above what he should be paying.

The offer is wrong. They have not taken the PPI premiums off the loan just the interest. The customer is therefore having to pay interest on the cash back less the PPI interest.

Yes time has passed and the loan will be reset but the fact £19000 should be taken off the loan not just the interest is where the mistake is being made. By taking off the full 19000 the loan balance would be correct and payments would be the same as if ppi wasnt added.

FP are going to be taken to task over this the FOS have recieved enough complaints to take it to a senior level.

The offer later also had two figure typos as well.

Its ludicrous they cant seem to get their offer correct.

This isn t my case by the way just another FP customer who has been willing with others not to accept the redress and push the FOS into action.
n:beer:

frustration1_2

Hello. My situation is almost identical to Niggly in values and the fact I have already received my cashback paid to me. I too received an offer letter which included the reference to agreeing to my balance increasing to more than the capital almost 6 years ago!

For those who have already received the "cashback", aside from any "compensation", has anyone been asked (i) are you in a position to send the "cashback" back to the supplier?, (ii) to supply copies of their personal bank statements from the date the repayment was banked to date, to show how the money was spent?

Also, I was not made aware receiving the cashback would result in the balance increasing, which both the FSA and OFT stated "unfair", until the Court Ruling in favour of the consumer.

I answered "no" and "yes"; however now having spoken with the FSA & OFT, it has been suggested (ii) is "irrelevant".

Even if I could find a way to send back the "cashback", why can Firstplus not show me the new balance as being less than the original capital?

Grateful for any replies.

Niggly_2

frustration1 wrote: »

Hello. My situation is almost identical to Niggly in values and the fact I have already received my cashback paid to me. I too received an offer letter which included the reference to agreeing to my balance increasing to more than the capital almost 6 years ago!

For those who have already received the "cashback", aside from any "compensation", has anyone been asked (i) are you in a position to send the "cashback" back to the supplier?, (ii) to supply copies of their personal bank statements from the date the repayment was banked to date, to show how the money was spent?

Also, I was not made aware receiving the cashback would result in the balance increasing, which both the FSA and OFT stated "unfair", until the Court Ruling in favour of the consumer.

I answered "no" and "yes"; however now having spoken with the FSA & OFT, it has been suggested (ii) is "irrelevant".

Even if I could find a way to send back the "cashback", why can Firstplus not show me the new balance as being less than the original capital?

Grateful for any replies.

I am fighting this with FP and FOS so hopefully any offers made and secured may have to be re looked at.

To me its simple I will have had to pay out £45000 on my policy (the one above isnt mine) and will have recieved £18600 back as cashback. So somehow some way FP have to restructure the loan so I do not pay the balance of £26400 simples.

They have over complicated the redress my coming up with complicated ways of trying to resolve the situation through settlement figures and refunds of interest and regular PPI refunds.

All they have to do is adjust the loan by an amount so my monthly payments reduce by enough to ensure that the £26400 is not taken in future payments. How hard is that to do. Instead they are using the old smoke and mirrors which I have seen straight through.

So it might take some time but I will win as the FOS are hardly likely to ignore their own guidence on redress i.e. put me back as if the ppi didnt exist and dont charge the customer exra interest and charges etc as outlined above.

N:beer: