Debt Collection Agencies/Refunds

[di30]

Re: Debt Collection Agencies/Refunds

Good one Jax, you beat me to it, I was about to ask similar lol, cheers.

[Celestine]

Re: Debt Collection Agencies/Refunds

Yeah it is a very good question.

Credit card charges refunds....even some bank charge refunds could be up for examination.

[Bill-K]

Re: Debt Collection Agencies/Refunds

So - for EXC to forward this to the OFT, we need to list some scenarios. I'll kick off with the easy ones, then...
1. (For completeness). The OC has not assigned the debt, but there are arrears, and the OC uses part of the refund to clear these.
2. As above, but the OC uses the entire PPI refund to reduce the debt further than just by the arrears - or to clear the debt completely, and earlier than scheduled.
3. The OC has Equitably assigned a DCA to act as collection agent, and the DCA claims part or all of the refund to settle the arrears. This may not be a feasible scenario, but I wouldn't be surprised if some DCA's might try this on in order to boost their commission as collectors.
4. The OC has Absolutely assigned the debt to a DCA, and sends all or part of the refund to the DCA to clear the arrears amount - or even the remaining balance. The DCA re-schedules the loan to reflect the exclusion of PPI from the balance owing.
5. The Absolute assignee DCA refunds all PPI which it has taken from the borrower, and also the PPI which the OC had taken prior to assignment.
6. As above, but the DCA uses some or all of the total PPI to offset against arrears - or to clear the debt.

[jax50]

Re: Debt Collection Agencies/Refunds

So - for EXC to forward this to the OFT, we need to list some scenarios. I'll kick off with the easy ones, then...
1. (For completeness). The OC has not assigned the debt, but there are arrears, and the OC uses part of the refund to clear these.
2. As above, but the OC uses the entire PPI refund to reduce the debt further than just by the arrears - or to clear the debt completely, and earlier than scheduled.
3. The OC has Equitably assigned a DCA to act as collection agent, and the DCA claims part or all of the refund to settle the arrears. This may not be a feasible scenario, but I wouldn't be surprised if some DCA's might try this on in order to boost their commission as collectors.
4. The OC has Absolutely assigned the debt to a DCA, and sends all or part of the refund to the DCA to clear the arrears amount - or even the remaining balance. The DCA re-schedules the loan to reflect the exclusion of PPI from the balance owing.
5. The Absolute assignee DCA refunds all PPI which it has taken from the borrower, and also the PPI which the OC had taken prior to assignment.
6. As above, but the DCA uses some or all of the total PPI to offset against arrears - or to clear the debt.

7. The OC has applied 'unfair' interest/fees to an account. Some time later the account is defaulted and sold in absolute assignment to a DCA. Later still the OC agrees to a refund of the unfair charges, but insists it will apply the refund to the DCA, and not the debtor.

[jax50]

Re: Debt Collection Agencies/Refunds

As an addendum to point 7. What if the debtor had already paid off the and settled the account with the DCA, prior to the refund being agreed by the OC with the debtor. Surely in that scenario a cheque would have to be issued to the debtor ? This would imply that it is not impossible to refund by 'payment', but that they are using 'offset', even with a 3rd party ..

[di30]

Re: Debt Collection Agencies/Refunds

MBNA, refunded OTR and their debt was fully assigned by DCA (Absolute), the cheque is made to the customer, so that is some good news.
I mentioned about this the other day here, because despite the customer being informed a cheque was being sent, the customer was not fully aware until yesterday if in the end it would end up with the DCA.

It should be as we all know the same for all.

[Bill-K]

Re: Debt Collection Agencies/Refunds

In response to Jax - I would expect the OC to send a cheque for the full refund amount directly to the borrower if the debt has been settled in full. The DCA would have no further rights to collect any money whatsoever. If the OC did send the DCA any or all of the refund, then they have no right to keep it, and should send it to the borrower - or back to the OC.

Refunding by direct payment was never impossible, but 'offsetting' to a third party (DCA) is what we are questioning here - and with the OFT (via EXC).

To Di - I agree - there should be consistency and clarity, so that we all know what to expect.

[EXC]

Re: Debt Collection Agencies/Refunds

Do you think the above enquiry would embrace all refunds, not just PPI ? Where an OC has misapplied charges and later conceded this was unfair (and by later I mean several years later), and agreed to refund ...then the same issue arises as to how this is undertaken.

Yes absolutely.

[di30]

Re: Debt Collection Agencies/Refunds

It also appears that the customer loses out on the interest as well (well not all customers), and I am speaking in regards of someone who was recently successful in 2 loan ppi reclaims, but the debt being within the collections dept of the bank. The bank said he was not entitled to any of the interest.

[di30]

Re: Debt Collection Agencies/Refunds

Now after all this time, did I assume customers were entitled to the interest?

[Bill-K]

Re: Debt Collection Agencies/Refunds

...the debt being within the collections dept of the bank. The bank said he was not entitled to any of the interest.

First time I've heard of that trick, Di. I would challenge it for 2 reasons I can think of right now.

1. If the bank had not mis-sold the PPI, then there is every possibility that the accounts would not have ended up in Collections dept., and the claimant should be entitled to refunds of penalty charges made as a result, along with interest on those - AND a refund of any higher interest rates charged.
2. This is against the FSA rules, which state that the claimant must be put back in the position they would have been if PPI hadn't been sold to them. Therefore 1 above applies, PLUS the refund of all interest which is attributable to the PPI payments. PLUS 8% SI.

We're not having this malarkey, are we folks ? !!!

[di30]

Re: Debt Collection Agencies/Refunds

Cheers for that Bill and exactly what I thought.

However, he has now taken it to the FOS, because he was not getting anywhere, if I had known about this before, then I said we would have helped all we can.
I'm sure the FOS will see through this though.....hopefully anyway.

[Bill-K]

Re: Debt Collection Agencies/Refunds

Glad we concur, Di. If he can make it clear to the FOS that this does not need adjudication on mis-selling, because that has been admitted already. It simply needs an adjudication on whether the interest can be witheld. Hopefully, it might get 'fast-tracked' if it's a simple matter.

[di30]

Re: Debt Collection Agencies/Refunds

Left him a message, thanks Bill..........again lol. x

[di30]

Re: Debt Collection Agencies/Refunds

Glad we concur, Di. If he can make it clear to the FOS that this does not need adjudication on mis-selling, because that has been admitted already. It simply needs an adjudication on whether the interest can be witheld. Hopefully, it might get 'fast-tracked' if it's a simple matter.

Bill, he messaged to let me know that he rang the FOS and mentioned about the interest, etc, and with the complaint already upheld, he said the caseworker said that there is nothing they can do just yet, and in regards of the interest, he was told yes they can use that towards the debt.
I am not sure how he worded his words about this to the FOS, as he does get confused.