Accept Offer or Refer to Ombudsman

adviceseeker77

Hi, just after the advice of people that know more than me.

The bank have admitted that they did not carry out the appropriate affordability checks on a large loan.

'Our records show that your application for a £23,000.00 loan was immediately approved by our systems and opened on 20 April 2019. A fixed amount of interest was added and the total amount to repay over the term of the loan is £29,890.08.

After a review of your application, salary and modelled spending alongside rent and credit commitments your net disposable income was not enough to cover the new loan repayment amount.'

1)They are offering to refund the interest which would drop the remaining loan amount down to about 3k. They are refusing to add any statutory interest to the refund. Even though the interest was added up front and so I have make large payments on the interest.

2)They are refusing to remove any negative information regarding late/missing payments- stating it would be unethical!!

3)And they won't decrease my payment plan as part of the settlement, and I would need to pay the  amount I cannot afford monthly.

Are any of those reasonable grounds to consider taking this to the ombudsman or should I take the offer. Thank you

MattMattMattUK

adviceseeker77 said:

Hi, just after the advice of people that know more than me.

The bank have admitted that they did not carry out the appropriate affordability checks on a large loan.

'Our records show that your application for a £23,000.00 loan was immediately approved by our systems and opened on 20 April 2019. A fixed amount of interest was added and the total amount to repay over the term of the loan is £29,890.08.

After a review of your application, salary and modelled spending alongside rent and credit commitments your net disposable income was not enough to cover the new loan repayment amount.'

1)They are offering to refund the interest which would drop the remaining loan amount down to about 3k. They are refusing to add any statutory interest to the refund. Even though the interest was added up front and so I have make large payments on the interest.

As they have offered to refund all the interest you have not made any payments on the interest, all your payments will have been allocated against the original amount itself. As they have refunded the interest in full, with inflation over that period it means you will have had an effective discount of £3,000-5,000 on the original debt. They do not need to add any interest to the refund because it was a repayment and does not exceed the original amount.

adviceseeker77 said:
2)They are refusing to remove any negative information regarding late/missing payments- stating it would be unethical!!

You may have some grounds to complain there, it depends on the specifics. 

adviceseeker77 said:
3)And they won't decrease my payment plan as part of the settlement, and I would need to pay the  amount I cannot afford monthly.

If you are on a payment plan that would indicate that you are also on reduced payments vs the original contractual payments. 

It may be worth you posting an SOA as people will be able to give you a bit more advice on your financial situation overall.
https://www.lemonfool.co.uk/financecalculators/soa.php

adviceseeker77 said:

Are any of those reasonable grounds to consider taking this to the ombudsman or should I take the offer. Thank you

You can take it to the ombudsman on any grounds you wish, but they will only consider the evidence and compare it to the regulations. In general people take the view that going to the Ombudsman is a nothing to lose situation but it can have some downsides, the biggest of which is with current timescales at the Ombudsman it likely means dragging it out for another six to twelve months. In theory they could also decide on something less generous than you are being offered by the lender, though that is somewhat unusual. I think it is very unlikely that they would find in your favour in terms of anything more generous than the original offer in financial terms (your point 1), they may or may not decided the payment markers need to be removed and reducing the payments would depend on the specifics, including both how much they have been reduced already, as well as your overall budget (which the SOA would give some good visibility of). 

If you want to get it over with then accept the offer, if you want to wait six months to a year to potentially get the markers removed then take the complaint to the Ombudsman, which you prefer is down to you.

ManyWays

Do you know the total amount you have paid the bank? If this is about 20k, then reducing your balance to about 3k (23k - 20k) is a full refund.

You havent been charged any interest and you havent yet repaid them more than you borrowed so it's common not to get any 8% interest in this situation. 

But it is unreasonable for them to refuse to allow you to repay the remaining 3k at a lower rate. 

What are the rest of your finances like?