MSE News: 'I got £82,000 PPI back'

magpiecottage

Moneyineptitude wrote: »

Effectively, this bloke was ripped off twice- firstly over several decades by his Bank and secondly by a ruinously expensive claim company.

To get ripped off by one business, Mr Stephens, may be regarded as a misfortune; to get ripped off by both looks like carelessness.

If he had bothered to query it with the bank when it first happened none of this would have arisen.

If he had simply filled in the form and sent it to FOS he would have got all his money back.

Barclays may, or may not, have been at fault but the ambulance chaser certainly saw him coming.

Premier_2

Moneyineptitude wrote: »

It's a reported £82,000, not "alleged" at all. I wonder how Guy Anker (the News editor of this site) would respond to your calling his professionalism into question in such a manner?

timmybear wrote: »

I have no idea. Ask him.

An unnamed source is reported as saying he couldn't give two hoots

timmybear

Well I only hope for the sake of the bloke in the story that he's not spent all his 'winnings' and has put some by for the tax.

Failing that, I hope for his sake if he has to take out a loan to pay the tax, he doesn't take PPI.

Failing that, hope for his sake that he doesn't instruct a 3rd party to claim it back for him if he does.

Flared trousers, feature wallpapers, TB, some things just keep coming back round...as do stories like his

Premier_2

Moneyineptitude wrote: »

...Remember also that he didn't actually pay £82,000 in PPI. It's the 8% interest over such a long period that has resulted in his enormous payout.

Assuming the charges were evenly applied over the 28 years, it still relates to about £800 per year / £66.66 per month for 28 years.

Now as this was against a barclaycard, one wonders just how much outstanding balance was accruing interest?
Current credit cards typically charge about 30% per year interest, but I can't remember what they were charging when BoE rates were 15% (currently BoE rate is 0.5%)

I fear the £57k received (£82k less the £25k fees) may well pale into insignificance when compared to interest paid on his base borrowing.

Edit: Just checked a typical card protection plan cost from years gone by (although not related to barclaycard, but an alternative credit card provider) and the cost was quoted as 75p per £100 outstanding ... so 0.75% of the outstanding balance.
That would mean this guy on average must have had an average outstanding balance on his credit cards of about £9000 every month for 28 years. :eek:

dunstonh

It's a massive payout and it's good news for those that are complaining but you do have to pick out some faults....

He says the insurance just appeared one day. He had no idea what it was for, or why he was charged.

This is typical of many PPI mis-selling cases where banks and other lenders simply add the cover without the customer's knowledge.

28 years of having the card. That is 336 statements where the premium was being paid yet he didnt know he had it. If we accept the unlikely story that it just appeared without knowledge (more likely a sales call where it was agreed to take it out) how do you miss over 330 payments going through? That is dreadful money management.

The bad news — Phil has to give £25,000 away

That is a very expensive stamp. After all, that is all most claims companies do. They put a stamp on the envelope containing a one-size-fits-all template letter that takes them about 30 seconds to generate.

It's good news for the individual but I hope it teaches him a lesson and he improves his financial management and responsibility in future.

JimmyTheWig

I think that in running a story like this, MSE has some sort of obligation to the people featured.

MSE, can you confirm that the guy is aware of the tax implications of this payout?

Using http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#savingscalc, I find that to end up with £82k after 28 years at 8% interest you'd need to save £68.73 a month.
Assuming that the PPI was constant, then this is what he would have been paying each month.
Which means he's paid £23,093 in PPI and the other £58,907 is interest.
I believe that tax on interest is applicable in the tax year when it is paid, rather than when it was earned.
Assuming he earns around £30k, he would get about £15k of this at basic rate tax and the rest of the interest at higher rate. That would mean tax on this would be £20,563.

It will also mean he won't get any tax credits, etc, due to this income.

spanielson

So not only did he not notice £82,000 of his money disappear over the years, he then paid 30% of it to someone for writing a letter to get it back...

We definitely need some financial education!

shazz5555

He got the money back, thats all that matters . Good luck to him I say!!

JimmyTheWig

shazz5555 wrote: »

He got the money back, thats all that matters . Good luck to him I say!!

Being prepared for a £20,000 tax bill or not being prepared for a £20,000 tax bill also matters!

magpiecottage

dunstonh wrote: »

It's good news for the individual but I hope it teaches him a lesson and he improves his financial management and responsibility in future.

That would be a triumph of your hope over my expectation DunstonH!