Northern Rock (NRAM) multiple consolodated loan claim

[UVRay]

Hi,

My girlfriend has made a claim to Northern Rock for PPI taken out on 4 successive loans, each of which was terminated before the end of the loan and consolidated into the next (larger) loan. Additionally there was a 5th loan taken out without PPI (when I found out she was paying it and told her to stop as it was a pointless waste of money in her circumstances) which was also terminated before the end of the loan.

NRAM have accept that she was mis-sold the PPI and offered a settlement, however I am very dubious about the amount they have come to. After much toing and froing asking for more information and messing around with spreadsheets I am happy that they have close enough calculated the correct amount for the over payment in the monthly amounts, however IMO as well as a redress for the enlarged monthly repayments there should also be a redress for the enlarged final settlement amount when the 5th loan was closed. I have queried this, and the response was "the last loan has no PPI on it", even though - via consolidation - this is quite clearly not the case. The redress letter itself even states "I can confirm that no PPI was sold on this loan however, and (sic) element of PPI was brought forward from the previous loan."

It has become clear through the course of our communications that the "QA Coach and Case Handler" dealing with this at NRAM actually has very little if any idea of how these calculations work, and we are going to get no further than "computer says no".

So my question before I go to the ombudsman is - am I right in my belief that there should be some refund for the fact that the settlement amount on the final loan was larger than it should have been if no PPI had ever been taken out or is there some reason why this should not be included?

TIA for any help

[di30]

Re: Northern Rock (NRAM) multiple consolodated loan claim

Hi,

My girlfriend has made a claim to Northern Rock for PPI taken out on 4 successive loans, each of which was terminated before the end of the loan and consolidated into the next (larger) loan. Additionally there was a 5th loan taken out without PPI (when I found out she was paying it and told her to stop as it was a pointless waste of money in her circumstances) which was also terminated before the end of the loan.

NRAM have accept that she was mis-sold the PPI and offered a settlement, however I am very dubious about the amount they have come to. After much toing and froing asking for more information and messing around with spreadsheets I am happy that they have close enough calculated the correct amount for the over payment in the monthly amounts, however IMO as well as a redress for the enlarged monthly repayments there should also be a redress for the enlarged final settlement amount when the 5th loan was closed. I have queried this, and the response was "the last loan has no PPI on it", even though - via consolidation - this is quite clearly not the case. The redress letter itself even states "I can confirm that no PPI was sold on this loan however, and (sic) element of PPI was brought forward from the previous loan."

It has become clear through the course of our communications that the "QA Coach and Case Handler" dealing with this at NRAM actually has very little if any idea of how these calculations work, and we are going to get no further than "computer says no".

So my question before I go to the ombudsman is - am I right in my belief that there should be some refund for the fact that the settlement amount on the final loan was larger than it should have been if no PPI had ever been taken out or is there some reason why this should not be included?

TIA for any help

Hi and welcome and sorry for the delay.

I note you worked out the calcs, but here is a link anyway below posted by Turbo and Bill if required.
http://www.legalbeagles.info/forums/...I-Calculations

If there was ppi on the previous loan and another loan is taken out then the full balance with that of PPI included is carried over to the following loan even if there is no ppi on the new'est loan.

I would write back before you go to the FOS, by giving them say 14 or 21 days to get back and if they fail to turn this around, or do not respond by then, then move on to the FOS.

What I would do though is write to the Chief executive officer (CEO) of the business/bank, and explain the matter with them, and ask them to get back by either of the above stated timescales.
You need to make it clear that customer complaints are just not understanding the fact that the loan with ppi was carried on to a new loan that included ppi on the old loan as a balance on the new loan, so you believe although there is no actual ppi on the latest loan account number of xxxxxxxx, but PPI was carried over within the balance of the last loan.

Are they saying they already refunded on that particular loan? If so ask for a breakdown as you need concrete evidence to proof this.

Good luck.

[UVRay]

Re: Northern Rock (NRAM) multiple consolodated loan claim

Hi, thanks for the reply. We have responded several times already asking for more information about how the calculation was performed, and each time any attempt by myself to engage in a technical discussion has not been addressed in the reply from the case handler. The first time we queried the amount - with specific questions - the questions were ignored, but we received a new quote which "corrected a few figures" (no details of what was changed in the covering letter). This only served to make me more unsure that their calculations could be trusted.

After a few more queries and non-responses, in the end they simply sent the output from the "Redress Manager" program which they use to produce the letter of resolution. It wasn't easy to follow, but provided some information I was missing and just made me more convinced that their final amount was incorrect, but when I queried this and asked specific questions about it the last reply we got was simply:

The calculation is correct. The last loan has no PPI on it. There is nothing more I can provide for you.

If you are still not happy, please contact FOS.

Regards,

So tbh I'm not sure we are not going to get any further responding back to NRAM again. :noidea:

[di30]

Re: Northern Rock (NRAM) multiple consolodated loan claim

Hi, thanks for the reply. We have responded several times already asking for more information about how the calculation was performed, and each time any attempt by myself to engage in a technical discussion has not been addressed in the reply from the case handler. The first time we queried the amount - with specific questions - the questions were ignored, but we received a new quote which "corrected a few figures" (no details of what was changed in the covering letter). This only served to make me more unsure that their calculations could be trusted.

After a few more queries and non-responses, in the end they simply sent the output from the "Redress Manager" program which they use to produce the letter of resolution. It wasn't easy to follow, but provided some information I was missing and just made me more convinced that their final amount was incorrect, but when I queried this and asked specific questions about it the last reply we got was simply:



So tbh I'm not sure we are not going to get any further responding back to NRAM again. :noidea:

Hiya
And your welcome.

You are as you now in your right to complain to the FOS now if you wish and have 6 months to do so by the date on the final decision letter. They MUST enclose the leaflet with the final decision, on the procedures "how to complain to the FOS".

Some banks/business have even overturned a final decision, that's happened in my case but different business, so if they are lenient enough they may still consider even if they have provided you with the final decision.

It seems like they have overlooked what you are trying to confirm to them, and if you want to continue to just write/email the CEO and raise your concerns with him or her, by giving just 14 days (then from them if nothing changes, complain to the FOS).

It's entirely up to you of course if you wish to write further to the Chief executive officer (CEO) or not ;-)

[UVRay]

Re: Northern Rock (NRAM) multiple consolodated loan claim

Are they saying they already refunded on that particular loan? If so ask for a breakdown as you need concrete evidence to proof this.

The refund does include an amount from the monthly payments for the final loan without PPI which is attributed to PPI consolidated into it, however there is nothing addressing the fact that if the last loan was inflated due to consolidated PPI, then IMO the final settlement payment will also have been higher than it should have been, and there should be a refund for this also. I'm looking for a second opinion on whether I'm right to expect that there should be a refund on the settlement amount.

[di30]

Re: Northern Rock (NRAM) multiple consolodated loan claim

Hopefully one of the other guys will be here at some point and confirm.

Business should calculate by using the FOS guidelines, this below is from the FOS site for calculations credit card and loan ppi, if settled loans etc, active etc........

The financial business should:

a) reconstruct the account by removing any premiums in respect of the PPI and any interest or charges in respect of those premiums;
b) if that produces a credit balance for any period, credit interest on that balance for that period at 8% simple per year;
c) pay the customer the difference between the revised closing balance and the original closing balance;
d) pay the customer interest on that difference at 8% simple per year from the date of closure to the date of payment; and
e) send the customer details of how the revised balance, the difference and the interest were calculated.

FOS may also consider it appropriate for the financial business to pay the consumer additional compensation for any distress and inconvenience he or she has been caused, including where the financial business rejected a complaint which it knew (or should have known) would be upheld, If they consider such an award is appropriate this will be specified by the adjudicator.

LOANS

These are examples full publication can be found on Link following them


Loan and PPI policy still in place at time of FOS decision.
Lender agreed for the cancellation of the PPI policy and restructuring of loan. E.g.
Overall loan repayments £250 per month but would have been £200 without PPI, term of policy was 60 months and complaint settled after 20 monthly payments.
· Return excess monthly payments of £50 x 20 payments up to date of settlement (£1000)
· Add interest to each payment of £50 at 8%simple, from date of each payment until lender repaid.
· Arrange loan to be restructured, so remaining 40 monthly payments reduced to £200
· Pay borrower £300 for extra inconvenience caused.

Loan and PPI policy terminated early before FOS decision.
Overall loan was for £23,000 (monthly payments £430) – but it would have been £18,000 with monthly payments of £340 without PPI. Policy term was 60 months; loan and policy cancelled are 23 monthly payments.
Borrower was required to pay £15,500 to settle the loan (after the business had taken account of the rebate of premium he was due of £1,200; but if he had not had PPI added to loan, the smaller loan of £18,000 would have cost £13,000 to settle at the same point.
So borrower had paid lender £90 a month more than he would have done, had the financial business not mis-sold the PPI policy; and £2,500 more to settle the loan after 24 months.
· Return 24 monthly payments of £90 to date of settlement (£2,160)
· Calculate difference between settlement costs incurred when borrower ended loan early and those he would have incurred had he settled the loan without the additional PPI element. (£15,500 - £13,000 = £2,500) pay difference to borrower.
· Add interest to each payment of £90 at 8% simple, from date that excess was incurred.
· Pay borrower £400 for extra inconvenience.

Loan and PPI policy ran to term before FOS decision
Overall loan was £7,500 (monthly repayments of £250) – but it would have been £6,000 with monthly repayments of £200 without PPI. Term of Loan and policy 36 months. So borrower had paid £50 more per month than if PPI not been mis-sold.
· Return £50 x 36 months of the loan (£1,800)
· Add interest to each excess payment of £50 at 8% simple, from date that excess was incurred.
· Pay £200 for extra inconvenience.


SUCCESSIVE SINGLE-PREMIUM PAYMENT PROTECTION INSURANCE

The exact approach to calculating compensation will depend on the overall circumstances of the individual complaint. In particular the calculations of compensation will vary according to the present status of the most recent loan and PPI policy. The financial business will be expected to consider the four scenarios set out below to ensure that the calculations are appropriate.

1. the most recent loan and the most recent PPI policy are still in force;
2. the most recent loan is still in force but the most recent PPI has been cancelled or has expired;
3. all the loans have been settled early and all the PPI has been cancelled;
4. the most recent loan and the most recent PPI policy have run the full term.

plus also additional compensation for any distress/inconvenience including where the financial business reflected a complaint which if knew (or should have known) FOS would uphold.

Subject to the consumer agreeing to cancel any PPI policy that was mis-sold and is stillin force the financial business should:

(A). In respect of each loan:
- recalculate the loan and the payments to what they would have been if the consumer had taken the loan without PPI
- repay to the consumer the amounts by which the payments actually made exceeded the recalculated payments;
- pay the consumer interest on each of these amounts at 8% per year simple from the date each payment was made to the date the compensation is paid;
- recalculate the balance that would have been outstanding at the end of each loan had the recalculated loan not included PPI.

(B) Calculate how much of the balance that was carried forward to the subsequent loan related to the cost of the PPI policy taken out for the previous loan: and
- repay to the consumer all amounts paid under each subsequent loan in respect of the carried forward balance, including interest and charges;
- pay the consumer interest on each of these amounts at 8% per year simple from the date each payment was made to the date the compensation is paid.

(C) Where the most recent loan is still in force and it includes the cost of the most recent PPI policy and/or any balance carried forward from the cost of previous
PPI Policies, the financial business should restructure the loan or arrange for the loan to be restructured so that the balance is reduced to the level that it would
have been if it had not included any of the costs of the mis-sold PPI policies.

(D) Set out in writing for the consumer details of the calculations under (A) (B) and (C).

[Bill-K]

Re: Northern Rock (NRAM) multiple consolodated loan claim

Hi Ray, and a belated welcome from me. Just posting here further to your question in the spreadsheet queries thread. It seems to me that you have a good grasp of the idea of 'carrying forward' of residual PPI with consolidation loans. Unfortunately, I don't think many claims handlers have the same grasp, and this is a disgrace IMO. I would try again with the CEO's office as Di suggests, but I fear that this may end up as a FOS claim.

It seems a common error for the claim handlers to 'forget' that PPI was carried forward to the final loan, even if no PPI was actually sold with the loan itself. We can help you get this sorted, but it will need you to post each spreadsheet in turn, so we can go through the figures with you. If you can do this, then remove all personal data before posting them. If you prefer greater confidentiality, then by all means email your spreadies to here, where Turboman and I are the only ones able to see your figures.

[UVRay]

Re: Northern Rock (NRAM) multiple consolodated loan claim

Thanks again Di & Bill,

I would prefer to get this settled satisfactorily via NRAM without having to bother the ombudsman, however we started the claim over 6 months ago now, and despite a number of letters, calls and emails back an forth we seem to be no further forward. However I think if I can get your spreadsheet filled out correctly and it confirms my figures that will give me something with a bit more weight behind it to go back to them for a final try.

To that end, bringing my questions over from the spreadsheet thread, Bill you said

the figure needed for 'Loan Settlement Amount' is the actual amount that was finally carried forward to the following (consolidation) loan in settlement of this one. In some cases, the 'PPI Rebate' is credited to the account upon settlement - but in others, it is sent as a cheque or direct credit to the borrower's current account. I'm not sure that you will get the actual settlement amounts from your bank statements, so you may not be using accurate figures for this.

Subject to better subjections, I think you will need to get more accurate figures if you are trying to get a clear expectation of your claim 'quantum.' One way to do this is to send a DSAR (Data Subject Access Request), which costs £10 - but should get you copies of ALL data which the lender has that pertains to you - and this should include statements of account. This usually will go back over 6 years, but sometimes you will get earlier data.

The claim is for loans between 2001-2006, so we wouldn't necessarily get the data (but probably would), however I'm fairly sure I now have all the figures I would need taken from the output from the "Redress Manager" program they use. In my early calculations I was using the amounts from statements to fill in the gaps, however I have been able to check these against figures from that output.

Northern Rock took the rebates (interest and PPI) off on settlement rather than via a cheque. I am guessing now that the spreadsheet settlement amount is the remaining loan balance before the rebates are taken off, is this correct? If so it should simply be:
(Initial Loan+PPI+interest) - sum of all repayments

However I am still getting a negative value in the "Total Refunds Claimed" column due to the settlement rebates for PPI which I am putting at the end of the item list.

[Bill-K]

Re: Northern Rock (NRAM) multiple consolodated loan claim

Difficult to see what the problem is without seeing the spreadies, Ray. But - if the PPI Rebate was credited to the account in each case, then I think this may have 'corrupted' the PPI 'carry-forward' calculations. The settlement amount would include a percentage of apportioned PPI within it, and this has to be added to any PPI taken out for the following consolidation loan. But - if this settlement amount has been additionally reduced by subtracting the PPI Rebate from it, then the carried-forward PPI calculation must be adjusted accordingly. I suspect that you may have included the PPI Rebates in the loan settlements, and then subtracted them a second time at the end of the calculation chain. This could yield a negative claim total, I think.

[UVRay]

Re: Northern Rock (NRAM) multiple consolodated loan claim

I've attached the spreadsheet with details from the first loan.

Still not sure what to put in for the settlement amount. Details are:

Cash Loan: £9,500.00
PPI Loan: £1,980.85
Loan with interest: £11,389.14
PPI Loan with interest: £2,384.64
Total loan amount: £13,773.78

Total payments made: £1,275.35
Interest rebate: £1,761.21
Insurance rebate: £1,521.50
Amount taken from new loan to pay off old loan: £9,215.72 (=total loan - repayments - rebates)

[Bill-K]

Re: Northern Rock (NRAM) multiple consolodated loan claim

The actual loan balance owing at the time of settlement should consist of the £9500.00 Cash Advance, plus the £1980.85 PPI Premium, plus Loan Interest charged to the account to date, less all payments made to date. This agrees with your analysis in post #8, Ray. BUT - unless we have a complete statement of account, we don't know what the Loan Interest amount was. In any event, the settlement amount should be the ACTUAL amount that you had to pay to settle the loan, so if you settled by cheque, then it would be the value of that cheque. With consolidation, it is the amount which was provided by the subsequent loan in order to settle the first loan. This should be recorded in the statement of account, and should ideally also be shown in the consolidation loan agreement.

Now, in our case here, the spreadsheet expects 17.2535% of that settlement amount to be PPI, and this PPI amount would then be carried forward to the consolidation loan, and added to the total PPI charged in it - thus increasing the 'PPI Apportionment Ratio' for the consol. loan. However, if a PPI & PPI Interest Rebate of £1825.31 was made to the account - instead of being paid separately by cheque, the spreadsheet still tries to calculate as if the Rebate was paid by cheque, and we need to modify the calculation method.

First, IF the settlement figure has included the PPI Rebate, then it must be reduced by that amount in order to calculate the 17.2535% PPI 'carry-forward' accurately. Using the figures in your spreadsheet, we have a Loan Settlement Amount of £12490.87, and IF this includes the £1825.31 PPI Rebate, then the actual carried-forward PPI would be 17.2535% of (£12490.87 - £1825.31), which comes to £1840.18. We must then subtract the £1825.31 Rebate from this, which leaves just £14.87 in PPI to be carried forward.

The £220. 05 PPI already paid, plus the £198.15 interest - are still to be refunded (totalling £418.20). The spready has subtracted the £1825.31 Rebate from this amount, leaving a negative amount of -£1407.11, when in fact it should have performed the above calculation for this particular scenario. I've attached a modified version of the spready to take account of this scenario, which should now make better sense !!!

Turboman and I are currently looking at ways to make this spready better able to cope with the many and varied aspects of SPI reclaims, and I think the ability for it to cope with this scenario will be well worth investigating. I hope the figures make better sense now - but please let us know if not - as we do want to ensure that our calculations can be relied upon.

[Turboman]

Re: Northern Rock (NRAM) multiple consolodated loan claim

Just clocking in from Bill's request

Will look in detail in morning as it needs a bit of time for me to understand

Turbs

[Turboman]

Re: Northern Rock (NRAM) multiple consolodated loan claim

Hi UVray

Its quite hard for us (me) to follow without access to the all info that you have

Can you please post up your Settlement Correspondence (original & amended) + the info they sent as output from their Redress Calculation program

I have found that it is possible to confuse the terms rebate & refund (PPI) --different lenders use different terinologies

+ the info on all the loans as in post 10--but including number of payments made too + anything you got which we havent seen

Thanks

Turbs