PPI on loan rolled into topup loan

stcyrus

had a loan with egg back in 2003 which had PPI added as a single payment .The PPI terms and conditions as well as the required information on my rights in regard to the PPI were missing which would have made the loan agreement void .
I took out a top up loan in 2006 and this loan was paid off/rolled up into the new loan which didn't have PPI added .
my question is if the original loan was not correct in its legal status would this affect the legal status of the second top up loan .
any opinions gratefully accepted .

magpiecottage

You have a valid complaint that a single premium PPI contract with the premium added to the loan was missold (assuming you were not provided with full details of the cost over the entire loan term).

The redress is to reset the loan so that it is as if the PPI was never taken out and to reimburse you accordingly.

ALIBOBSY

There is also a claim against the PPI from the first that would be rolled into the second loan, so as Maggie says they should restructure the first loan. This then gives them a new settlement figure to roll into the second and that loan should then be restructured as well.
As far as I know PPI does not effect the legality of a loan, just the amount charged.
My understaning of the FOS redress guidence for front loaded PPI on loans is to restructure a loan and if not longer live a refund of any payments (inclusive of interest) made.
But in this case it makes more sense to roll up the total to reduce the amount rolled over to the second loan and restructure the second loan based on the new figure.

I suppose they may argue a straight refund of the difference on the first loan, but FOS redress is that you should be in a position you would have been in had the PPI never happened, and that means the second loan should be reduced, otherwise you are paying interest on the PPI that rolled over and never should have been there at all.

Ali x

BTW FOS redress guidence is here
http://www.financial-ombudsman.org.uk/publications/technical_notes/ppi/redress.html

this clearly shows any charges and interest if caused by the PPI being there should also be refunded-but most banks aren't doing this.