PPI claim on a debt sold to a 3rd party?

Jan_S_2

Hi, I've been successful in reclaiming PPI on 2 of my loans thanks to this forum and the templates. I'm having difficulty with 2 other loans, this being due to the lenders offering me a payout (M&S Money) but because I still have a debt, which previously was theirs and that they have now sold to a 3rd party, to which I have a payment arrangement in place, they said they will pay me out but will use the money to redress the debt I have with them....I have confirmed with the company I pay monthly to that yes, the debt was sold to them, so do M&S have the right to do this? I had no problems with the 2 claims I was successful with. My circumstances changed drastically when I got divorced, hence the payment of my debts to 3rd party companies which I have payment arrangements with them all and adhere to. I am quite dissappointed with M&S as the sum is just over £4k which would be quite a windfall to me these days. Any advice at all would be extremely helpful. Thank you.

magpiecottage

It will depend on your contract with them - and their contract with the third party.

ALIBOBSY

If it is fully sold to the debt collector then no they can't. One of the first rules relating to finanacial offsets is that both "accounts" must be owned by the same bank.
Usually you can tell from your credit file if the original creditors entry has gone or been listed as settled and a second/replacement entry in the debt collectors name appears. Also any letters from the debt collectors usually say "on behalf of our clients" if the OC is retaining the debt.

Here is the ombudsman guide to set off rights
http://www.financial-ombudsman.org.uk/publications/Ombudsman-news/40/40_setoff.htm

Clearly debt sold to a DCA CANNOT be included in that.

But I also believe there is an arguement that the rules regarding set off apply only when someone has cleared funds in one account and a debt with arrears held by the same. These ppi refunds are NOT cleared funds sat in an account they are REFUNDS.
There are a few more arguements such as being in hardship and having more that one debtor (it would be unfair enrichment to pay all the refund to one debtor when you should get the money to be split between any debts).

Ali x

dunstonh

Back in my banking days, if money was received to a debt that had been passed to a collection agency, there was an agreement that the money would be sent on to the collection agency.

I am quite dissappointed with M&S as the sum is just over £4k which would be quite a windfall to me these days

Seeing as you defaulted on the debt and effectively never paid the PPI in the end and it the debt is still outstanding, albeit being paid back slowly, it is not unreasonable and indeed logical for the redress to go against that same debt.

ALIBOBSY

dunstonh wrote: »

Back in my banking days, if money was received to a debt that had been passed to a collection agency, there was an agreement that the money would be sent on to the collection agency.



Seeing as you defaulted on the debt and effectively never paid the PPI in the end and it the debt is still outstanding, albeit being paid back slowly, it is not unreasonable and indeed logical for the redress to go against that same debt.

Just because the theives agreed to split the spoils doesn't make it legal lol.

The refund should go to the OP to split between creditors as they see fit. Remember debt collectors pay a pittance for debts and the original lender writes the amount off against tax.

From many threads I have read on a number of forums it would appear the banks try this on, but as soon as challenged they back down and pay up.

I would quote the rules of offset and challenge the banks position in writing and take it from there.

At the very least the 8% interest should go to the OP.

Ali x

Jan_S_2

Thanks everyone for your advice. What Ali stated is exactly what I had intended to do as they had honoured the claim by letter a few weeks ago but I was waiting on the final amount to be agreed, which was agreed today by letter but only to be told it would be paid back to M&S to reduce my outstanding liability with them(?), I intended to split the amount between existing creditors and take me a little bit out of financial hardship.

I will check the link that you supplied re the ombudsman and again, thanks very much. I will give you's an update once I have one if I can ever find this thread again...I keep losing them for some reason
Thank you