Business PPI claim rejected

kingbingo

A few years ago I was setting up a small business and arranged a loan through Lloyds to help me get the equipment and premise I needed. Although I was not told I had to take the PPI to get the loan it was most definitely heavily implied. Since I needed the loan, I was mollified that at least I could cancel it after I was up and running. While I did try and argue to an extent, I did not want to risk not getting the loan, so reluctantly accepted. The PPI cost £6,840 plus interest at 7% bringing the total to £8,655.

Once the business was up and running and proven to be cash generative and profitable I went back to Lloyds on a number of occasions trying to get the PPPI taken off. I was always told some version of how difficult and complicated that would be, even that if I removed the PPI I would need a whole new loan and a new arrangement fee, which would wipe out most of the value of any return of the PPI cost.

Although I have not been following this PPI story closely I believe that this is not case, I should have been able to cancel the PPI any time later? And that I should not have been pressured into taking the PPI anyway on day one. So I recently complained.

The complaint was rejected. I just rang up and was given two reasons.
1) Somebody tried to contact me was unable to get me on the phone.
2) I was sent a cooling off period of 14 initially so i should have cancelled then if I was going to.

Does the above seem like legitimate reasons, and is this typical for Lloyds, perhaps they reject all new requests first time around to see who kicks up a fuss?

kingbingo

I love the Newbie alert by my name.

Be nice!

dunstonh

I was always told some version of how difficult and complicated that would be, even that if I removed the PPI I would need a whole new loan and a new arrangement fee, which would wipe out most of the value of any return of the PPI cost.

That is correct. Although the decision to charge a new arrangement fee or not is theirs to make as a commercial decision. They could have waived it if they wanted to do but as a business person, you know that a business can decide whether they waive charges or not.

Does the above seem like legitimate reasons, and is this typical for Lloyds, perhaps they reject all new requests first time around to see who kicks up a fuss?

Lloyds have moved to a position that they tend to uphold more than they reject.

You havent told us what your reasons for complaint were. So, an really offer comment on whether their response is fair or not.

I love the Newbie alert by my name.

I dont see anything next to your name saying that.

kingbingo

dunstonh wrote: »

That is correct. Although the decision to charge a new arrangement fee or not is theirs to make as a commercial decision. They could have waived it if they wanted to do but as a business person, you know that a business can decide whether they waive charges or not.

Is that so, removing PPI requires a brand new loan to be made? Given that i was making the original loan on the SFLG scheme which would not have been an option second time around a new loan would be very difficult.

dunstonh wrote: »

You havent told us what your reasons for complaint were. So, an really offer comment on whether their response is fair or not.

My complaint was that I never wanted the insurance in the first place. I only took it as I was told that my loan would have been considered much more favourably if I had it. My preference not to have it would have been abundantly clear to the relationship manager dealing with my application.

I had understood that it was now accepted that new applicants should not have been told it will affect the decision to take their loan and used that as pressure to sell unwanted insurance.

dunstonh

My complaint was that I never wanted the insurance in the first place. I only took it as I was told that my loan would have been considered much more favourably if I had it.

What evidence do you have to support that accusation?

I had understood that it was now accepted that new applicants should not have been told it will affect the decision to take their loan and used that as pressure to sell unwanted insurance.

Correct. They shouldnt be doing that. However, proving it is hard. Most complaints dont get upheld for that reason as it is so hard to prove. Most get upheld for another reason (such as the PPI being added to the loan and you being charged interest on it).

kingbingo

dunstonh wrote: »

What evidence do you have to support that accusation?

Regretfully since this was all based on conversations in person in a Lloyds office, none whatsoever, it never occurred to me to record the conversations. Although maybe recording every conversation with a bank is a useful life lesson.

I take it from what you say that the onus is on me to prove that the loan was sold incorrectly, and not for Lloyds to prove they sold correctly. If so how on earth do any claims not on a recorded line ever get upheld?

dunstonh wrote: »

Correct. They shouldnt be doing that. However, proving it is hard. Most complaints dont get upheld for that reason as it is so hard to prove. Most get upheld for another reason (such as the PPI being added to the loan and you being charged interest on it).

As it happens this did happen. Not actually the bit I am upset about, but given I can’t prove what was said to me in person all those years ago I’m happy to take it.

So can the loan be held as mis-sold, simply because it had interest added (7% in this case) and was bundled into the same repayments as the loan itself?

dunstonh

I take it from what you say that the onus is on me to prove that the loan was sold incorrectly, and not for Lloyds to prove they sold correctly. If so how on earth do any claims not on a recorded line ever get upheld?

They get upheld due to other failures which can be proven (such as single premium with interest). The problem with verbal accusations is that they do not know if you are telling the truth. Whilst you may be totally correct in your recollection you could also be mistaken in what you heard or you could be one of those that is trying it on.

For example, with endowment complaints, being told you would get back a lump sum in excess of the mortgage on maturity is a mis-sale. Being told you could get back a lump sum in excess of the mortgage is not. one letter difference in one word. 10-15 years down the road, can you really remember what was said. One we see with PPI a lot is people told they need it. That could be be that they are incorrectly being told they have to have it or it could be that they are being correctly told that they have a financial need for it.

Verbal accusations are so hard to prove but it does go both ways. A firm equally cannot rely on verbal comments to protect themselves. Documentation is King.

So can the loan be held as mis-sold, simply because it had interest added (7% in this case) and was bundled into the same repayments as the loan itself?

That is the angle I would take and the FOS seem to be upholding over 90% of loan PPI complaints with that being a common reason. I suggest you go back with that reason and if they refuse, then take it to the FOS.

kingbingo

dunstonh wrote: »

That is the angle I would take and the FOS seem to be upholding over 90% of loan PPI complaints with that being a common reason. I suggest you go back with that reason and if they refuse, then take it to the FOS.

You have my thanks.

Out of interest, what do you make of their reason for rejection that I had a 14 day cooling off period?

dunstonh

Out of interest, what do you make of their reason for rejection that I had a 14 day cooling off period?

I believe they cannot use that as a reason for rejecting your complaint. yes it is a document issues but its one of those that FOS put no weight on. A court would but the FOS tend to be slightly more consumer friendly as they look at fairness as well as law.

kingbingo

Dunstonh, following your advice I got in touch with Lloyd. I better emphasized the points you recommended as a result they reversed their earlier decision and are going to repay me £5,100.

I am very pleased, and wanted you to know your advice has had a great result for me. Thank you again.

dunstonh

Good news indeed.