Firstplus PPI claim after receiving cashback

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Mermaid77
Mermaid77 Posts: 11 Forumite
in Reclaim PPI & other insurance
Wondering if anyone can offer some advice....

We received a letter from Firstplus yesterday regarding mis-selling PPI. Having read through it we think we might have a case for a few reasons - they implied that the cashback was a feature of the PPI which we now understand it wasn't, we knew that the PPI cover was only for 5 years but did not realise that we would be paying interest on it for the duration of the loan (25 years :eek:) and OH (the PPI policy is only in his name) had death in service and sickness cover through his employer which would have covered him if needed.

The confusion we have is that last year we received the 5 year cashback refund from Firstplus and we're not sure what effect that will have on a claim.

Details of the loan are:
Start date: July 2006
Loan amount: £35,000 (original monthly repayment £295.15)
PPI: £6,975 (original monthly repayment £58.83)
Duration: 300 months
Cashback received in September 2011: £6975

Any comments or advice would be much appreciated :)
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  • di3004
    di3004 Posts: 42,579 Forumite
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    Hi there

    I'm sure someone will confirm, but I don't think it makes any difference if you received cash back, if you still have reasons, you may still have a case, good luck.
    The one and only "Dizzy Di" :D
  • Mermaid77
    Mermaid77 Posts: 11 Forumite
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    Thanks for the quick reply :)

    Our main confusion which I didn't really explain in my first post is that the cashback we recieved is (by our calculations) more that we have re-paid to date for the PPI. So, if our claim was successful and - best case scenario - they removed the PPI from the loan, would we then technically be in arrears? Presumably then our monthly payment would go up (at least in the short term) even though the balance of the loan would be less?
  • di3004
    di3004 Posts: 42,579 Forumite
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    Hi there

    Was that because of the interest as well you received more than assumed?

    Hopefully someone in the same position will know more of how this works and be along soon, good luck.
    The one and only "Dizzy Di" :D
  • Mermaid77
    Mermaid77 Posts: 11 Forumite
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    We received £6,975. The original monthly payment for the PPI was £58.83 so over five years we would have paid £3,529.80 - well probably a bit more than that due to interset increases but nowhere near £6,975!

    The cashback is supposedly equivalent to the full PPI amount without interest :huh:
  • amersall
    amersall Posts: 17,005 Forumite
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    The cash back is just the PPI premium, you do not get the interest back at all.

    Put the mis sell claim in and put that this was Single Premium PPI that was put on at the start of the loan and to be repaid over the term with interest, you received the PPI back but not the interest attached to this for the 5 years and you now have no cover and the whole PPI is still on the loan to term end with interest.
    When you win, they will take the whole PPI amount off the balance and this will save you thousands in interest over the remaining term, your monthly payment may go up as you had the cash back, if they offer the win back to you, it is imperative you do not take this option, you need the loan reset.
  • Mermaid77
    Mermaid77 Posts: 11 Forumite
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    Thanks amersall. We've sent the claim off, so fingers crossed!
  • amersall
    amersall Posts: 17,005 Forumite
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    fingers crossed, good luck and let us know how you get on.
  • mrsbunny1979
    mrsbunny1979 Posts: 19 Forumite
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    I took out a first plus loan in 2007 for £54000. They added a PPI loan on for £13000, to run for 25 years at £588.09 per month.
    In February 2012, I received a letter urging me to reclaim the PPI as the 5 years was up and if I didn't reclaim it in 30 days I would lose it. I filled in the form, received the money and thought nothing more about it.
    After speaking to my financial adviser, she urged me to question First Plus about whether or not it was mis-sold. I did this, and eventually received a letter telling me that it was mis-sold and I was entitled to a refund. They sent me two options; either receive the payments back in a cheque, followed by another cheque for the 8% interest, totalling £9,000; or take the amount off the loan to reduce the overall balance.
    On looking at the paperwork, if I take option A which is to receive the £9,000 back, my monthly payments go up to £600 per month. If I take option B whereby the money is applied to the loan, my monthly payments go down to £540 per month, despite the PPI costing £115 per month. I questioned First Plus about it, and I have to pay back the £13000 they sent me, but over 20 years at 9.9% interest which is why my payments go up.
    My question is, this cashback was a sweetner to the deal. It was what made me take out the PPI in the first place, so surely I shouldn't have to pay it back? I really need advice on this as they are pressuring me to accept an offer and I am reluctant to pay it back over 20 years, paying huge amounts of interest.
  • stonecold_2
    stonecold_2 Posts: 7 Forumite
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    By taking the £13,000 cashback you effectively turned your £54,000 loan into a £67,000 loan. By accepting the cashback you basically turned the £13,000 PPI policy into £13,000 loan. The bank aren't then refund you that money again but if you choose option b and have it paid off the loan your payments will reduce and you will still receive the cheque for the 8%. You can't expect £13,000 for nothing there are many customers out there who never got any cashback so if you imagine you hadn't of taken the cashback and settled your loan before you made your complaint you would have got the £13,000 back plus the interest. As you have already had it and your loan is still running the interest is taken of the loan and you are offered the money you have paid to date on the PPI as a cheque but as you have already had the £13,000, if you took the cheque your loan repayments would go up. :)
  • amersall
    amersall Posts: 17,005 Forumite
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    option B is the one to take, make sure they reduce the loan balance, ask for a settlement figure now and then one when the redress has been taken off the loan, they are correct in that the PPI redress goes back to the loan, but they have to take it off to reduce the balance, also the 5 years you paid the PPI, each month they reduced your loan balance ( not by a lot though ) for the payments you paid, as you would not have paid this payment or the interest if you did not have the PPI then this has to go back to the loan too, just make sure the PPI is taken off the loan balance, the offer they have given you is good to say you already had the PPI back.
    So you have had in effect £22.000 back in total.
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