Section 75 - compound 8% interest

Jammark

Hi all, 
I’ve just had a Section 75 claim overturned by Santander. It was ludicrous they originally rejected the claim, I complained to the CEO and eventually they’ve seen sense. They’ve credited me with 8% compound interest for the transaction. However, they’ve calculated it from the date I made the Section 75 claim, not the date of the transaction. 

Can anyone shed any light on if they’ve actioned it correctly, or incorrectly as I feel? 

Any help is much appreciated. 

eskbanker

I'm not aware of anything obliging them to backdate reimbursement to the transaction date - if they'd accepted your claim as soon as you made it then I'm not sure it would have been reasonable to expect interest to be added, so claim date seems a realistic starting point, although difficult to say without knowing more about the timescales involved?  In fact if they've compounded it then you may be up on the deal, as it would normally be applied on a simple basis....

Sandtree

Statutory interest is simple not compound so they’ve already been generous from that point. 

What was the breach that resulted in the claim to start with?

Jammark

The transaction was for a car for £23,800. Basically within 30 days (Day 26) on an independent report I was told that the car was dangerous and unroadworthy. Needed at least £10k spending on it to get it to roadworthy standard. 

Santander rejected the claim based on the vehicle being 7 years old and having covered 115k miles. Vehicle was a Range Rover so nothing excessive for a vehicle like that. 

Jammark

Transaction was on 10th October. 

Submitted Section 75 claim on 5th November. 

Santander issued the first response on 4th Jan as the rejection. 

Overturned the decision and paid out on Wednesday 20th Jan. 

eskbanker

Jammark said:

Transaction was on 10th October. 

Submitted Section 75 claim on 5th November. 

Santander issued the first response on 4th Jan as the rejection. 

Overturned the decision and paid out on Wednesday 20th Jan. 

How much of the transaction was funded by the credit card?  Presumably anything on the card wouldn't have been statemented until after the purchase date and then paid weeks later, i.e. from when were you actually out of pocket?

How have they compounded the interest over what is realistically a pretty short period of time?

I appreciate that you'll be keen to get everything you're legally entitled to but to be honest getting your entire £23K back plus cost of independent report (presumably) plus a few hundred quid of interest isn't a bad result, especially if only a small amount was on the card, even if you feel you could potentially squeeze another hundred odd out of them!

Jammark

I guess it’s just the way they behaved and I’d taken a loan out to fund the purchase. I put £1000 on the CC and paint it off the same day. 

They’ve refunded me about £260 interest, I just worked it out to be about £500? 

TadleyBaggie

For anyone interested in the backstory: https://forums.moneysavingexpert.com/discussion/6208328/used-car-oil-leak-bought-10th-october#latest

eskbanker

Jammark said:

They’ve refunded me about £260 interest, I just worked it out to be about £500? 

You said "they’ve calculated it from the date I made the Section 75 claim, not the date of the transaction" but that figure would only cover reimbursed interest from then up to Christmas (£260 is about 50 days of 8% interest on £23.8K), so this doesn't make any sense - did they share any of their workings?

Descrabled

Tax

The bank will have deducted tax at 20% of course. This can be reclaimed from HMRC after April if within your tax free allowance.

Jammark

eskbanker said:

Jammark said:

They’ve refunded me about £260 interest, I just worked it out to be about £500? 

You said "they’ve calculated it from the date I made the Section 75 claim, not the date of the transaction" but that figure would only cover reimbursed interest from then up to Christmas (£260 is about 50 days of 8% interest on £23.8K), so this doesn't make any sense - did they share any of their workings?

Haven’t shared anything, just going on what they’ve told me on the phone.