8% Statutory Interest

amonag68

Hello,

Can you clear up some confusion. Is the 8% statutory interest, that can be awarded on top of any ppi claim, meant to be refunded direct to the claimant and not used to deduct from any outstanding loan. I understand if you win a ppi claim and you still owe that company they are obliged to deduct the redress from any outstanding balance. However, I thought the 8% should be awarded directly and not to reduce any balance.

Hope someone can help clear up this confusion for me as I think I am being ripped off by Egg banking.

Regards

Andy

magpiecottage

It differs slightly between a loan and a credit card. I am guessing it is the latter. If so then what happens is they go through the history of it and rework it.

This means that if you did not pay off the outstanding balance in any month they will use the premium toward the balance for that month. If it was clear then you get 8% interest per annum simple interest on it until the next month when the new premium is added in and you go round the cycle again.

Because the interest charged is more than 8% per annum this works to your advantage but may mean there is no cash payable now.

amonag68

Hi,

Thanks for your reply.

It is actually an Egg loan. They refunded the ppi and contractual interest against the outstanding loan about 18 months ago. At the time they refused to pay the 8% as they made out it wasnt their policy to do so. After the court case in favour of the FSA this year I decided to send a fresh claim against their refusal to pay out the 8% compensation payment. They recently agreed but instead of sending it direct to me, like all the other companies I have dealt with have, they just yes you can have the 8% but we will keep it and deduct off the loan.

I hope that is clearer, if you could expand further I would be grateful. Like i said I have won quite a few ppi claims and if I had any balance outstanding they would deduct the ppi claim off but I have always been awarded the 8% element directly. Its only been Egg that hasnt. Are they correct or am I entitled to this compensation payment of 8% interest.

Thanks

Andy

amonag68

Hello,

Can Magpiecottage or anyone else help further with my query on the award of 8% statutory interest on PPI claims. This was an Egg loan that I am asking about for my information.

Any help would be greatly appreciated as I am in limbo at the moment and dont know what to do about this matter.

Regards

Andy

magpiecottage

FSA Rule DISP App 3.9.1G says, "Where the complainant's loan or credit card is in arrears the firm may, if it has the contractual right to do so, make a payment to reduce the associated loan or credit card balance, if the complainant accepts the firm's offer of redress. The firm should act fairly and reasonably in deciding whether to make such a payment."

Note the "in arrears" bit. If you are not in arrears they cannot do it except by mutual consent.

On the other hand, you will be paying interest at considerably more than 8%.

amonag68

Hello,

Thanks for that info. However they have set off the ppi premium already. I was under the impression that the 8% Statutory interest award was a compensensation payment for being deprived of the money in the first place and should be paid directly to the claimant, im only taking about the 8% here not the whole ppi refund.

For instance I successfully claimed against Barclays Loan. I owed them around £4K and the ppi claim came to £2787.61 the 8% on this award was worked out at £678. They set off the £2787.61 against the 4 grand but sent me a cheque for the £678 as this was the 8% element.

This is what confuses me with Egg have done. Hope I have made it a little clearer to you or anyone.

Thanks

Andy

tifo

i haven't heard of paying charges towards any balance and interest to the customer .... in my cases, the banks wanted to pay ALL the refund to a DCA. This was decided as fair by the FOS though I didn't accept the offer (there was no balance outstanding to the DCA in any case, it had all been settled with full payment). But the FOS wanted me to then chase the DCA for my refund. The letters from the DCAs confirming a zero balance was not enough for them to ask the bank to pay me.