Who's entitled to the refund??

[di30]

Hi folks

Like myself my mate (well former bro in law) won a case with the FOS of mis sold account package, however his complaint is official where mine was upheld but the adjudicator is waiting to see if Lloyds agree or not, if they dont then mine will be reviewed by the ombudsman.
Now in my bro in law case his have gone through and agreed.

Now sometime ago he had debt on his account via Lloyds when back last year they Assigned it (absolute assigned) to Cabot where he pay's them a monthly payment arrangement.

Now in my opinion if the debt been fully assigned as absolute then the bank has no hold on the account anymore, where instead Cabot does.

So who should be entitled to the refund?

He is hoping it will come back to him, to help him with council tax, rent arrears etc, he got into difficulties due to not being able to work due to his disabilities.

I did post about his letter on another thread some time ago of the letters he received in the same envelope from Lloyds and Cabot when it was confirmed sold to Cabot and to not send any money to lloyds anymore but to Cabot.

Cheers folks.

[Celestine]

Re: Who's entitled to the refund??

When Lloyds sold that debt to Cabot, they probably did so for a smallish fraction of its value, lets say 30%.

The 'debt' itself will then have been partly offset against tax as a bad debt by Lloyds.

I personally cannot see any legal or moral reason why the PPI refund should be given to Cabot. They can still pursue your brother in law for the debt and if enforceable, they could still recover it via the courts or the repayments he is currently making. To me, these should be the only methods by which they get 'paid', Not because Lloyds mis sold PPI and ripped him off.

[di30]

Re: Who's entitled to the refund??

Brill thanks Cel x

[di30]

Re: Who's entitled to the refund??

Also came across this from the FOS website:



where the business has “written off” or “sold on” the consumer’s debt

Some businesses make a commercial decision to “write off” or “sell on” a consumer’s debt when it is significantly in arrears. But different businesses use different terminology. For example, a business may say that it has “sold on” or “written off” a debt when it has actually transferred it from one part of its own business to another.

Where a business has genuinely “written off” a debt – meaning that it has agreed not to seek repayment in any circumstances – it might say that it is unfair for it to pay compensation to the consumer for the mis-sale of the PPI when the consumer did not pay the contractual payments on their debt. The business might say that the compensation should be offset against the amount of the debt it has written off. Where this happens, the consumer will usually say that because the debt does not exist any more they should receive all of the compensation.

In order to fairly compensate the consumer we will consider the position they would have been in if they had not taken out the PPI. We might conclude that the consumer would have fallen behind with the payments to their debt anyway and the debt would ultimately have been written off – but we will consider any evidence that the consumer has that this would not have been the case.

Where we decide that the debt would ultimately have been written off anyway we will usually tell the business to restructure the loan to remove the effect of PPI – that is, reduce the amount written off to what would have been written off if the consumer had taken out the loan without PPI. If there is any remaining compensation owed to the consumer because they have paid more than they would have done without PPI, we would usually say it is fair for the business to offset that compensation against any remaining amount it wrote off.

Where a business simply moved a consumer’s debt from one part of its business to another, rather than selling it on, we would usually apply the approach we take when a consumer is in arrears – set out above. We would also apply this approach if a business chose to buy back a debt it had previously sold on to a third party.

But if the debt was sold on to a third party and it cannot be bought back, or the business chooses not to buy it back, we might take a slightly different approach. That is because the consumer does not owe the business money – it owes money to the third party that bought the debt instead. When selling the debt the business made a commercial decision and accepted an agreeable price for the debt. In those circumstances, we would usually tell the business to calculate the compensation as normal at the point it sold on the debt – and to pay all parts of the compensation to the consumer. The business should also consider the possibility that the consumer might have incurred further losses since the debt was sold on as a result of PPI being included on their debt.

Based on examples of good practice we have seen, the example below shows how a business might set out how it has calculated compensation for a mis-sold PPI policy alongside a loan that has been sold on to a third party:

http://www.financial-ombudsman.org.u...i/redress.html

[di30]

Re: Who's entitled to the refund??

These were the letters he received last years, one from lloyds and the other cabot in the same envelope.


The letter from Caboot.........

Dear

Welcome to Cabot

The Cabot Credit Management Group has recently bought the account you held with Lloyds TSB and we're now responsible for answering your queries and receiving payments.

According to our records, you currently owe £****.00. If you wish to repay this amount in full now, please contact us to discuss how to make your payment.

Your monthly repayments:
Your agreed monthly repayment plan with Lloyds TSB now needs to be maintained with Cabot. Please ensure that with immediate affect that all future payments are made directly to us.
We regularly review the arrangements on our accounts, including the monthly payment amount.

IMPORTANT, if for any reason, we don't receive your payments on time we'll cancel this arrangement. The full outstanding balance will then become due.

Paying By direct debit..........................................

Other payment methods...........


Contacting Cabot..............................The most important thing for you to do now is to get in touch with us (blah....blah)

Our aim is to help customers get their accounts cleared - so to do this contact us soon.

Yours sincerely.


.................................................. .................................................. .................................................. .................
The Lloyds letter enclosed with the Cabot letter........................Addressed Credit Operations (Rosyth)

Dear Mr

Account Number

We are writing to notify you that Lloyds TSB has assigned all of its respective rights, title, and interest in respect of the above referenced account (including the outstanding balance) to Cabot Financial (UK) Limited effective as 03/08/2012.

The total balance sold was £****.00, as at the date of sale 03/08/2012. Any payments made towards your account after 03/08/2012 will be forwarded to Cabot Financial (UK) Limited, and will be deducted from the balance shown above.

Under the terms of this assignment, and as defined in the Data Protection Act 1998, Cabot Financial (UK) Limited, is now the Data Controller of your Personal Data contained in the records of this account.

Cabot Financial (Europe) Limited has been appointed by Cabot Financial (UK) Limited, to manage your account in line with the arrangements agreed with BLS Collections. It is essential that all future payments and correspondence regarding this account now to be directed to Cabot Financial (EUROPE) Limited, att:

Cabot Financial (EUROPE) Limited
PO Box 241
West Malling
ME 19 4NA

Yours sincerely

***** ********
Lloyds TSB.

[Bill-K]

Re: Who's entitled to the refund??

The FSA/FCA does have some PPI rules that stipulate that PPI refunds may be used to offset any arrears, but as Cel implies, when the debt has been sold on, then there are no arrears - because it has been 'written off,' and tax allowed on this write-off. From Di's post, it does at least look as though the FOS will weigh up the circumstances in each case.

With any debt that is still 'active,' there are two facets to the PPI redress. The first is to refund the PPI premiums taken so far, along with apportioned account interest charged - plus any 8% interest that may be applicable. It was the original lender who made these charges, so it is they who should refund them. If they no longer 'own' the debt, then I agree with Cel that they should no longer be allowed to 'appropriate' the refund. In many cases, it could be argued that the PPI mis-selling was a direct cause of the debt becoming 'delinquent' - so the original creditor had a hand in events from square one. To then claim that they should be compensated - or at least allowed some priority - for their earlier behaviour is nonsensical IMO. Moreover - I believe they should be made to pay additional compensation to many PPI claimants for wrecking their credit history - and even their health.

The second facet of PPI redress is that the remainder of the loan must be re-scheduled, so that the element of PPI that exists within the remaining balance owing is removed. This is the DCA's problem, however, as they bought the loan "in good faith" (if indeed such honour exists among these highwaymen). Although they bought it for 30% (as er Cel's example) - they had an expectation of recovering 100%. They would now have had to reduce that expectation by as much as 20%. So - for a £1000 debt, which they bought for £300, they expected to make £700. This has suddenly been reduced by £200 through no fault of their own - reducing their profit to a mere 50%, poor guys (I hear you whisper ?)

The debt they bought was (arguably) mis-sold - as it was 'contaminated' by an element of PPI. I assume that the FOS look at this aspect, as it would appear that the DCA now technically has a PPI complaint against the OC., and needs to be reimbursed for the £200 shortfall in the expected value of the debt. This means that the OC has had to write off the debt for even less, so presumably they can reclaim a higher tax advantage for this.

But - nowhere along the line can I see a reason why the DCA should have a 'right of appropriation' against the claimant's PPI refund, and I agree with Cel on that.

[charitynjw]

Re: Who's entitled to the refund??

So, lets say a debt has become 'actionable' due to non-payment.

A debt purchaser buys it at 'face value'. (They get a massive discount, but that's a separate issue)

Bad Borrower then realises that PPI had been missold, and reclaims accordingly, thus reducing the actual debt owed.

But the DCA chases for the 'face value' of the debt which they purchased.

If they recover 100%, wouldn't the debtor be paying an amount which includes the original PPI to them? (DCA)

Can't be right, Shirley?

Or am I missing summat?

[Bill-K]

Re: Who's entitled to the refund??

This is where the punch-up erupts, I guess. The DCA is effectively ordered by the FOS to reduce the amount it is pursuing the debtor for. The FOS must therefore ensure that the poor wee thing does not become a victim of the OC's mis-selling !!! Presumably, the FOS has to order the OC to offer recompense for this - and in the example - the OC has to pay the DCA £200 to compensate it for its loss.

...and don't call me Surely...

[charitynjw]

Re: Who's entitled to the refund??

& the DCA, honourable upright member of the business community, will tell Bad Borrower that the 'face value' of the debt has been reduced.

What could possibly go wrong?

:flypig::flypig::flypig::flypig::flypig:

[Bill-K]

Re: Who's entitled to the refund??

Indeed so, fellow gladiator. The OC has to pay out cash to TWO PPI mis-selling victims, after having sold the wretched debt on for a pittance, because they presumably couldn't be '@r$ed' with it. How effing sad is that ? Not a lot of incentive to be 'nicey-nicey' there, is there ? But the DCA is their 'preferred customer,' I guess, as they are prepared to swallow and not spit.

The Consumer is the villain, and is pursued for their refusal to engage in such indecency.

[di30]

Re: Who's entitled to the refund??

Very interesting thank you all, your all fab!

Now do I tell him to let his adjudicator know that the debt was full assigned/sold on?
Or would they be aware of that do you think? (I'm not sure if he mentioned anything on this part of it to be honest).

[jon1965]

Re: Who's entitled to the refund??

I read somewhere, I think it was on Cag where an OC had bought back a part of the debt from the assignee . This became a complaint but the FOS did not uphold it. I am sorry I can not link you to it but in that case it seemed that within the contract of sale between the OC and debt purchaser was the opportunity for the OC to buy back some or all of the outstanding debt

[dogtired]

Re: Who's entitled to the refund??

Had two with Crapbot, one a BOS credit card which I got the PPI via the ombudsman but Crapbot got most of it.
The other they have just, in effect, written off because I had documentary proof that it had been settled, took over three years though, but did get some PPI back on that ( in effect the same bank as the second was Halifax)
FOS are most defiantly overwhelmed by the PPI scandal as it is now three weeks since I challenged a Barclay card one so have just SDAR on that one..good luck!!

[di30]

Re: Who's entitled to the refund??

Thanks folks

Do you think its worth my in law sending his adjudicator the message of him paying his debt to Cabot over the last year then?

[charitynjw]

Re: Who's entitled to the refund??

I read somewhere, I think it was on Cag where an OC had bought back a part of the debt from the assignee . This became a complaint but the FOS did not uphold it. I am sorry I can not link you to it but in that case it seemed that within the contract of sale between the OC and debt purchaser was the opportunity for the OC to buy back some or all of the outstanding debt

Hang on a sec - I thought this was a no-no!

I know the man to ask - Sparkie!

BRB