When the Financial Ombudsman upholds a complaint about an affordability complaint, the typical award is a refund of interest and charges on the unaffordable credit plus 8% simple interest. This interest can add up to a lot of money if the loans were repaid a few years ago.
If you want to find out more about affordability refunds, and how people are winning these cases even when they never missed a payment, read Affordability complaints about different types of credit which has articles about the different types of credit with template letters you can use.
IMPORTANT: you don’t have to calculate this extra interest to make a claim. You can just say your credit was unaffordable and explain why. You don’t have to say how much you think your refund should be.
But some people want to be able to check that an offer is correct, so this article looks at this.
8% simple interest is also added to a lot of other refunds, including PPI and NOSIA refunds. The principle there is the same, it’s 8% times the number of years since each amount being refunded, but with credit card calculations over a number of years it becomes even harder to work out.
Why is 8% interest added?
The Financial Ombudsman says:
“Where a consumer has been wrongly deprived of a sum of money in the past – for example, where an insurance claim was wrongly rejected – we usually require the financial business to add interest from the date the consumer should have had the money until the date the money is actually paid.”
8% is a flat rate for everyone, regardless of the type of claim. You will sometimes see this referred to as “statutory interest”. It is set at this level because some people may have had to borrow because they were wrongly deprived of money, so the high interest aims to reflect this.
What is “simple interest”?
“Simple interest” means the same amount is added every year. If your refund was £1,000 from one payment exactly four years ago, you would have 8% of £1,000 (£80) added for each of the four years, so 4 x 80 = £320.
This is not how interest on savings accounts typically works – there the interest is usually “compound interest”, so in the second year you would get interest on the interest you got in the first year… This is more complicated to work out. Simple interest is, well, simple!
It’s straightforward (if not easy) for payday loan refunds
For payday loan refunds you have to know exactly which amounts are being refunded.
Take a typical example: the Ombudsman tells The Money Tap (an imaginary payday lender) to refund all interest after the third loan and you know these add up to £1,260. You can’t just take 8% of this total, because the amount of interest that is added depends on how long ago each payment was. So if the loans being refunded were between 2012 and 2014, the interest payments for the first loan will have roughly 4 years of interest added and the last loan will only have about 2 years of interest added.
To work this out, you need a list of all the interest/fee payments that you made. You can’t get this from your bank statements, because the payments you were making would usually have included repaying the capital amount you borrowed. For a simple loan that you repaid in full and on time, you can just take the amount borrowed off the repayment you made and the amount left is interest plus charges. But if you topped up / took an installment loan / paid some money to it on more than one date – here you will probably need a statement of account from the lender to work out what was happening.
When you have a list of payments that are being refunded, you work out the interest for each payment. First find the number of days between the payment date and now and calculate:
8% simple interest = payment being refunded x number of days x 8 / 36500.
Then add up these individual amounts. I suggest using a spreadsheet, which can also work out the number of days figure for you!
Coming up with a rough figure
That can be a lot of work. If a lender has made you an offer and you are trying to decide if it is a good one, it’s helpful to be able to make a guess at what the 8% interest might be.
Take the previous example – if The Money Tap has offered you £800, should you accept this? It not an insultingly stupid £25 offer, you may well need £800 right now and not want to wait while this goes to the Ombudsman, but it’s good to be clear about what you might get if you do take the case forward.
In this example the total interest and fees paid, not including the first few loans, comes to £1,260. If these were spread evenly over the 2012-2014 period, then on average each repayment would have 3 years of interest, so £1260 x 0.08 x 3 = 302 interest. If your loans got bigger as time went on, the exact amount would be lower, but you could guess at say £200-£250.
So you need to think if the delay of going to the Ombudsman is worth the chance of increasing £800 to £1,500.
In this sort of situation, it’s worth going back to the lender and saying that you would expect to get 8% interest added if you go to the Ombudsman, but you would prefer to settle this now if they would increase their offer to £1,100 or whatever you feel is a reasonable compromise.
When does interest start being paid?
The interest is paid from the date you paid the lender to the date the final settlement is calculated by the lender. So if the adjudicator decides in January you should have a refund but the lender insists on it going to the Ombudsman so it takes 8 more months, you will get 8 more months of interest :)
Also a lender doesn’t have to pay you interest if you still owed them money at the time. So if this is on a credit card say that you sill owe a balance on, you may not get any 8% interest at all. If the refund will clear your balance, you may get 8% paid on the last few months where the balance should have been cleared, but not right back to 2012 when you took the card out.
How do you know if a lender has calculated the interest correctly?
If the Ombudsman has told a lender to refund you and add 8% interest, how do you know if this is calculated correctly?
You could do the rough calculation above. If the lender says the extra interest is £220, that could well be right. If they say it’s £130, that sounds surprisingly low and you could ask for an explanation of how they calculated it.
This isn’t normally a problem. There are two exceptions:
- if the 8% interest looks like EXACTLY 8% of the refund. That would only be right if the amount you are being refunded for was exactly one year ago – that’s very unlikely, so the lender has probably made a mistake. Point this out to the lender or to your adjudicator.
- if you repaid a loan over a very long period, sometimes the lender starts the 8% calculation at the point the loan was repaid. That is wrong – the calculation should be done separately for each payment.
Refunds on credit cards, catalogues and overdrafts are harder
These are “running account” types of credit, where there wasn’t a single loan that was being repaid, but you may owe more or less as you make payments from and to the account.
Here the 8% interest only normally starts to accrue from the point where the balance you owe (taking into account the payments from the account and the payments you have made to the account) would have gone into credit if there was no interest added.
The fact your statement for a month may say you have £20 in interest, doesn’t actually mean that you will get that refunded plus 8%. Because until you have cleared the balance on the card, that £20 interest is just used to reduce that balance faster.
Take a simple example. You have a credit card and buy one item worth £500. You make minimum payments for 8 years which add up to £670, but they have only reduced the balance to 300:
- if this account is decided to be unaffordable, you would get an interest refund of £670-500=£170. Plus 8% interest.
- here the 8% interest starts at the point your payments to the account total £500 – from there on they owe you money, not the other way around.
- that may be about 2 years ago. From that point 2 years ago, the amount they owe you goes up avery month, from 0 at the start to £170 now. On average over this 2 years period they owe your 170/2 = 85. So the 8% interest is 2 years at 8% on £85.
Where you have been borrowing and paying variable amounts this can get very complicated to work out.
If the account was closed several years ago, you get the full 8% added for each of those years in addition.
What about tax?
Most of your refund isn’t taxable – it’s your own money you are getting back, not extra income. But the 8% interest added is taxable.
However this is the equivalent of interest on savings, so it should come into the “£1000 a year of savings interest is tax-free” new rule that was introduced in April 2016. At the moment some payday lenders are still deducting tax – you can reclaim this from the taxman using an R40 form, see How to get PPI tax refunded for more about how to do this.
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kevin keating says
in 2009/2010 My self and my wife experienced financial problems caused by losing my job then later on having 2 heart attacks and my wife battling breast cancer of which my mortgage lender was informed of in October 2010 I got a job working away from home I contacted my lender and with there agreement I was to pay 2000pounds a month about a week later court papers for me and my wife was delivered myself I was unable to attend but my wife did both parties put there case to the judge but when my lender was asked why we are in court when an agreement had been reached they was unable to give a satisfactory reply in the end the judge ruled that we pay only 1000 a month until our arrears was repaid which we have done shortly after the court hearing our lender informed us that they have added the court costs to our mortgage as we are now in a position to clear our mortgage we contacted our lender and requested they refund us the court costs which they have we also asked for interest at 8% from the time charges was added to being refunded dates being 14thOctober 2010 costs added up till 31December 2017 when they was refunded they seem to be trying to avoid paying interest could you give me a figure I can go back to them with and prevent a long running dispute I wait your reply
Sara (Debt Camel) says
In this sort of situation, the 8% rule is probably not relevant – they should probably remove the extra mortgage interest that has resulted from the court costs being incorrectly added.
If they have had the problem for more than a couple of weeks, I suggest you write to the with COMPLAINT in the title saying you still haven’t received a reply to your letter/email dated dd/mm/yy.
Link says
Hi folks,
When does 8% simple interest finish being calculated? When the lender makes their offer or when they process their payment?
Sara (Debt Camel) says
In practice it is when they make their calculation. This may feel annoying but a few weeks here os there is unlikely to be worth arguing about.
Link says
Thanks Sara, I’m not looking into bringing up any sort of dispute. I’m just wanting to double check and make sure their calculations are correct.
One last question, does simple interest applied include fees charged or just the original interest of the loan?
Sara (Debt Camel) says
it should apply to all amounts which are being refunded to you.
Link says
Thanks again Sara. The interest is more or less correct.
Nicola Handley says
Anybody help me wonga have been told to pay loans 17.to 66 back and 8 percent back.how to I add the 8 percent on.just worked out the owe me.2993.90.loans are from 2012 to 2017
Sara (Debt Camel) says
It will probably be between £200 and £500 … sorry it depends very much on when the interest was paid – if a lot of it was recently because your loans were larger, then it will be less than if a lot of it was longer ago. FWIW I would trust Wonga to get the calculations right.
Kara says
I worked the interest paid each calendar year then worked out 8% and multipled by the amount of full years since. Do it for each year of borrowing. My calculations were pretty accurate although a bit under the true figures as I only included full years.
adele says
Hi I have just received my 1st refund which was £136 + £48.72 net interest.
Can i claim back the Tax on this and is it worth it. Many Thanks
Sara (Debt Camel) says
That will be about £12 tax deducted. You can claim back up to £200 in a tax year. This ta. X year ends on 5 April so this may be your only one this year. How to do it is described here: https://debtcamel.co.uk/ppi-payday-refund-get-back-tax/. Your call if it’s worth it for £12.
EmmaB says
Hi Sara,
I hope this thread is still open for discussion. Apologies if not.
I’m just working through a rough expected offer from QQ now the Ombudsman has agreed they have to pay and I work out (after taking 20% tax from the interest) that they owe £8012.
I don’t know that I have done this correct as it seems like an awful lot of money. Can I put the detail of interest paid and dates so you can look at it for me please or is that too time consuming for you?
If I’ve got this right then I got Wonga wrong lol and accepted a massively low offer. I’ve only just seen this way of working it out.
I’ll pit the details down and if you do have time then great but if not, of course that too is fine. I’m going up to date of acceptance today and the amount is the interest paid, then number of days since then to today.
9/12/11 £29.50. 2375
£24.96. 2345
22/1/12. £23.97. 2331
29/2/12. £29.50. 2293
4/4/12. £29.50. 2259
6/5/12. £29.50. 2227
£29.50. 1197
£29.50. 1167
£27.81. 1137
26/10/12 £29.50. 2054
£29.50. 2034
£26.97. 2004
1/2/13. £29.50. 1956
£29.50. 1926
£29.50. 1896
£10. 1886
£10.50. 1856
EmmaB says
Continued…
8/6/13. £29.50. 1829
30/7/13. £29.50. 1807
£29.50. 1777
24/11/13. £29.50. 1660
21/12/13. £186.58. 1633
4/4/14. £70.68. 1529
£113.84. 1499
£88.88. 1469
£104.29. 1439
£79.95. 1409
£73.29. 1379
£82.19. 1349
£59.39. 1319
£48.23. 1289
£50.37. 1259
£28.61. 1229
£15.18. 1199
I look forward to hearing from you and thank you so much for your help.
Emma
EmmaB says
Oh I think I just realised I was doing it wrong and divided by 365 not 36500 haha.. thought it was too good to be true!
EmmaB says
Sorry, I’m still confused.
So with the first one:
£29.50 x 2375 (days) x 8 / 36500 is £1.91
Is the £1.91 the interest over the whole 2375 days?
Thank you Sara
Sara (Debt Camel) says
could you summarise this for me? How much interest is being refunded from 2012? From 2013? from 2014?
EmmaB says
I’ll try..2011
£54.46
2012
£285.25
2013
£422.58
2014
£814.86
Obviously they were paid on different months but that’s the totals of the years.
Thanks Sara
Sara (Debt Camel) says
My guess is somewhere in the £550-630 region.
EmmaB says
Thank you Sara.
SabbyY says
Hi Sara,
Apologies for this question but I just want to make sure I’m calculating the expected interest correctly.
My first repayment to Lending Stream was made on 28/01/2013
I’ve calclulated there have been 1,967 days between my first payment and today’s date (18th June) as follows:-
2013 – 337 days
2014 – 365 days
2015 – 365
2016 – 366
2017 – 365
2018 – 169
I’ve calculated my interest and charges paid to Lending Stream during 27/01/2013 and 29/11/2016 to be £2,776.56 so can you see that I’ve calculated my estimates statutory refund correctly so I can then apply this method to my other loans?
Refund amount 2,776.56 x 1,967 x 8 / 36500 = £1,197.04
So total expect refund is to be circa £2,776.56 + interest of £1,197.04 = £3,973.60
Have I got this right or am I way off? Any help would be much appreciated.
Sara (Debt Camel) says
That calculation would be right if you had paid LS £2776.56 on 28/01/13. But I doubt you did, I suspect you just paid them £150 or something on that date. The later payments will then have a lower number of days.
Also LS will probably deduct basic rate tax from the 8% interest added – but you can reclaim up to £200 of this in a tax year, see https://debtcamel.co.uk/ppi-payday-refund-get-back-tax/
SabbyY says
Hi Sara – thank you. That makes more sense, but how would I be able to figure out what the interest would be per day? So for example I had a loan on 25/02/13 of £540 and then repaid payments on 02/04/13 of £154.50, 29/04/13 of £257.50 and then on 16/05/13 of £535.60. So on this basis I’ve repaid £447.60 in interest and charges. How would I calculate these would you say? Would I just split it out over 3 payments and then do the calculation based on the day the payment would have been made as an estimate? Could you show me how the calculation would be done for this particular payments and I can apply this same method for all of my loans.
Sara (Debt Camel) says
payments on
02/04/13 of £154.50,
29/04/13 of £257.50
16/05/13 of £535.60
For each payment work out the number of days until today. As you did in your example. Then calcualte the 8% interest seperately for each payment, using the payment amount and the relevant number of days. Then add up all three to get the total 8% added interest for that loan.
then repeat for your other loans.
Sara (Debt Camel) says
or you could just wait and see if what LS calculate looks roughly right! You don’t have to work this out and hardly anyone ever does!
Gary says
Sara,
Should simple interest be calculated from the date a loan was issued or when it was settled? I’ve had conflicting answers from the FOS on this.
Sara (Debt Camel) says
It is calculated based on the dates you made the payments that are being refunded.
Jim says
Hi,
I have just been awarded 3 out of 6 loans via the ombudsman for loans taken with pay day uk.
So am trying to work out what I would roughly be getting back? I have tried to work it out but just confused myself.
I have worked out the interest per loan.
1) Feb 09 £112.50
2) April 09 £100
3) June 09 £50
If you could come up with a rough estimate on what I might get back that would be great 👍🏾
Thanks
Sara (Debt Camel) says
They add up to £262. The 8% interest would be about £190-£200 extra.
paul ransome says
good afternoon all,
i took a payday loan out with quickquid back in 2013 in total borrowed about £1200 paid back bout £5500 including interest,
i took one loan then kept topping it up with 15+ loans over space of 2-3years i put in a claim thru a company to get some money back its now @ the final stage with quickquid how much should i be expecting to get back and how long should it take?
thankyou for any help you can give me,
Paul
Sara (Debt Camel) says
You need to ask your claims company – they will know the exact situation and should have a better idea.
Steve says
Hi,
I took out 3 loans with LS. FOS have upheald my complaint for the 3rd loan for £200, which was defaulted on and I entered into a payment arrangement which was fully paid.
I think from what LS sent me, I have paid £560 – £200 for the original loan. £360. I think this includes charges and defaults.
FOS has confirmed that LS is to refund the interest and charges and fees etc.
Do I take the total say £360 then add on 8% which is to be calculated over the course when i took out the loan; 05/06/2013 and repaid on 27/10/2016.
Is this how I work out what I would potenitally receive?
Thanks in advance.
Sara (Debt Camel) says
Yes, it’s fiddly because the interest should be worked out separately on each payment you made but it’s going to be somewhere between 25 and 35% extra at a guess.
steve says
Aww Thank you Sara, not bad considering.
John says
(POST 1 OF 2 DUE TO LENGTH (SORRY!) )
Hello,
After a year of going through the process with Quick Quid and the Financial Ombudsman (FO) i have received an offer from Quick Quick through the FO, but i am very confused how the money was worked out and if i should accept the offer. Excuse my naivety as the person from the FO has said the offer met the recommendations, but i still feel the offer is not correct. Please can i have some guidance?
Loans being taken into consideration by the FO:
Loan 3 – Date Repaid – 26/02/2011 – Loan Amount: £100 – Repayment: £125
Loan 4 – Date Repaid -01/04/2011 – Loan Amount: £100 – Repayment: £125
Loan 5 – Date Repaid – 28/04/2011 – Loan Amount: £100 – Repayment: £122.50
Loan 6 – Date Repaid – 30/09/2011 – Loan Amount : £100 – Repayment: £122.50
Loan 7 – Loan Sold – Loan Amount: £250 – Repayment Amount: £312.50 (I am unsure if i paid any of this one off to Quick Quid or the new owner of the debt)
Frank says
Hi Sara,
Was wondering if you could help me. I have a company offering to refund all charges/interest on a loan plus statutory interest. The loan was taken out on 25/09/14 and repaid on 25/08/16 after some re-arranged payments (initial terms were 18 months (17 x £129.62/1 x £129.61 totalling £2,333.15). I’ve worked out interest/charges at around £900.81 after reading annual statements, but not sure what the potential stat interest would amount to (not sure if its from the period loan taken out to agreement date this week and if its stat interest on the principal sum/principal sum plus charges or the interest refund amount).
Any help is greatly appreciated.
Sara (Debt Camel) says
The 8% interest is on the interest you paid. From what you have said you should get about 4 years of statutory interest on £900 so that would be about £300. That’s pretty inexact!
Frank says
Thanks Sara…Still need help if that is ok? So the company came back with a redress calculation which appears wrong (in my opinion). They quoted the initial funding amount was £1,000 but it was in fact £1,500. They go on to advise that they have refunded all interest/charges on the account prior to loan being sold in July 2017 (this is disputed as in terms of an SDAR, they acknowledged a final payment (with a receipt) on in August 2016 and neither them nor the new party ever contacted me about other money after August 2016).
They then say that as a result, the loan balance before sold to the third party was £480 and they have advised the TP of this. They then note figures as:-
£1k loan amount
Amount paid to them £450
8% interest- £68
Balance Amendment Amount: £520
I have went back to them with various highlights from the SDAR and asked them to investigate/recalculate. is this a good tactic? also, should i threaten to pass to FOS if they do not return with an increased figure?
Cheers
Sara (Debt Camel) says
They quoted the initial funding amount was £1,000 but it was in fact £1,500.
Doesn’t that work in your favour?
If you think the figures are wrong, challenge them, but i can’t tell anything from what you have written.
Frank says
Apologies…sometimes i go on a bit!
I agree that the figure should work in my favour but will keep you updated
Thanks
Brad says
Hi Sara,
I was offered a refund by Loans 2 Go which did not have 8% interest included. However, I have accepted the refund without the 8% interest in Feb 2020 ( i wasn’t aware of the 8% interest at that time). Interest should have been added from 2014.
Would i still be eligible to enquire and ask for 8% interest?
Thanks
Sara (Debt Camel) says
no, sorry.
Liam says
working this out, does this sound about right?
I paid back £702 on top of the capital for a loan, that has today been classed by FOS as irresponsible and I need that money returned + 8% interest.
Loan was settled (last payment to them) in April 2016 so four and a haf years ago exactly. So (very roughly is all I’m after) do i multiply 8x 4.5 to get 36, and then increase the £702 by that? That makes £954 so about £252 of interest.
Sara (Debt Camel) says
sounds about right. 20% tax will be deducted from the 8% interest pat, but you can reclaim that see https://debtcamel.co.uk/ppi-payday-refund-get-back-tax/
Sara (Debt Camel) says
you just had the one loan? Did your guarantor make any payments?
Marg says
Hi
A quick question, sorry for being dense.
I am a higher rate tax payer, does that mean I should play more tax on any refund interest I get?
Many thanks
Sara (Debt Camel) says
Probably, see https://debtcamel.co.uk/ppi-payday-refund-get-back-tax/. But only the extra 8% is taxable, not the refund of the interest you paid.
Marg says
From the uk gov website
Income Tax band Personal Savings Allowance
Basic rate £1,000
Higher rate £500
Additional rate £0
Kimberley says
Hi Sara,
Could you let me know where you get the ‘36500’ from your calculations please in the ‘8% simple interest = payment being refunded x number of days x 8 / 36500’ formula.
I am struggling to understand why it’s not ‘payment refunded x number of days x 0.08’
Thanks in advance!
Sara (Debt Camel) says
My calculation has the top line bigger than yours by 100 times and the bottom line also bigger by 100 times. So they cancel out and give the same result.
Cj says
In march j received 16143 from provident ..in that I paid over 1200 in tax can I cla9m some of this back at all
Sara (Debt Camel) says
Yes most people can. Most basic rate taxpayers can claim £200 back, non taxpayers can claim it all back. See https://debtcamel.co.uk/ppi-payday-refund-get-back-tax/ for what to do.
Angus says
I have been awarded compensation from FOS. I took out a £11,000 loan back in 1998 and sued them for irresponsible lending. The credit care was £4180.00 and interest charged was £5595, total loan was £20,766.00. FOS asked BOS to add up the total loan that I received and the repayments I made should be deducted from this amount and 8% simple interest. Dont know how this interest work? This loan is 60 monthly payments of £346.10 and I paid off the loan in July 2000 using Aunt’s inheritance. How do I work this out and how much I should get as this loan was made 23 years ago!
Thank you
Sara (Debt Camel) says
The credit care was £4180.00
sorry, what is this? is it some form of insurance such as PPI?
I have never heard of anyone winning a case about a loan taken before 2007 – was there some special reason FOS looked at the case? or is this just a PPI case being upheld, not loan affordability?
Angus says
Hello. Ive no idea about the credit care. It is rare because of special circumstances as I am profoundly deaf and have limited English. It is for a personal loan. Nothing to do with PPI. This is related to loan affordability and I was lent to irresponsibly. FOS has asked BOS to refund me all of the interest and charges that I paid on the loan. I complained to BOS but they told me I was out of time to complain and FOD disagreed as I was still in time to make a complaint. This was esclated to Ombudsman and they decided that I have a case under special circumstances.
Hope this helps?
Sara (Debt Camel) says
ah ok, a really unusual case. But I am sorry I can’t really guess at what the numbers are. Do you have a statement of account for the loan, showing all the ammounts you paid?
Angus says
Yes, 60 monthly payments – £11,000 loan, £346 per month for 60 months, taken out in July 1998, and paid it off in July 2000 using aunt’s inheritance. Can’t remember how much I paid it off, (I think it was about £10K when I paid it off) – so it worked out that I paid £346.10 for 24 months.
£11,000 loan – credit care of £4180.66, interest is £5595.34 at APR 12.8% – total loan is £20,766.00
Hope this is sufficent ? Any problems, let me know.
Thank you!
Sara (Debt Camel) says
I’m sorry but I don’t know what this “credit care” is. if it is some kind of insurance then it may not be classified as a charge that they have to refund. You need to ask FOS,
Then you need to know exactly how many money payments you made and what you paid at the end. You can’t work this backwards from know what the toal loan cost should have been as extra charges and interest may have been added on.
Domonique says
Hi. I took out 3 loans with tfs loans
I have been offered interest back on loans 2 and 3
Loan 2 was for £4000 with the total repayment of £9382 which some of that was used to pay for the first loan and left me with 1635. In 2016
Loan 3 was for £5500 which £4000 was used to pay off the 2nd loan. And the total repayable is £12900.
I have £1300 left to pay on this loan.
Not sure how to calculate this at all. But my question is will it be the interest of £12900 or is the interest done separately from each loan.
Sara (Debt Camel) says
Can you add up the payments you have made to loan 2 (not including the settlement at the end)? And separately to loans 3?
Just the total cash payments, ignore if the TFS system says you were paying interest or capital.
Domonique says
Hi. So yes. The total cash payments I made before I topped up was 936.67 in 7 months. Then I topped up my loan to 5500 which is the current loan am still paying.
V says
Hello,
Could anyone please advise if this is correct,
Across the four loans with Bamboo you had the physical benefit of a total of £9,900.
Over the course of the four loans you have repaid a total of £7,100.60, meaning you have not yet repaid the money that you have had the benefit of leaving you with an outstanding balance on your current loan.
Please note that there is no refund due as you have not yet repaid the original combined loan advances, the 8% is only due on any overpayments due to you. In your case, the redress due is a reduction in your outstanding balance by the interest paid on the first three loans and the interest payable on your current loan.
This is the only redress which is telling me the 8% is not due.
Sara (Debt Camel) says
This is an offer from Bamboo? Your 4 loans – were three of them top ups?
V says
they were all separate loans, however I didn’t pay back the 4th one. Would the 8% still be due on the first 3?
The offer was to remove the interest from the 4th loan, add up the interest paid on the first 3 and remove that from the 4th aswell. This was after FOS involvement.
Loan Advance:
£2,000.00
£2,000.00
£1,400.00
Interest Amount:
£1,316.61
£2,084.23
£1,911.10
Total Amount Payable:
£3,316.61
£4,084.23
£3,311.10
Total Repaid:
£2,339.39
£2,595.75
£1,728.14
Interest due:
£339.39
£595.75
£328.14
For your current agreement of £4,500.00, the interest due is £8,619.60, a total to repay of £13,119.57.
Sara (Debt Camel) says
So you settled all the first loans pretty early? how large a gap was there until the next loan was taken out?
And how much have you paid to this last loan? total cash payments, ignore whether this is interest or principal.
V says
Yes reasonably early. There was about 7 months gap between the loans and the last one I’ve paid 500 towards it. Thank you.
Why would being in an IVA affect this? And what if you were discharged from it within 2 years?
Sara (Debt Camel) says
So you took a loan, settled it in a few months, had a 7 month gap, took another and did the same three times?
Where did starting your IVA fit into this timetable?
And you settled your IVA early? Were any of the bamboo loans included in your IVA?
V says
Yes exactly. After the last loan, 2 months Into paying it I lost my job, I had several other large debts which all agreed to stop interest and take reduced payments, apart from Bamboo. This forced me to apply for an IVA, which was back in 2019. Yes I settled it early as most of the debts were payday loans which ultimately ended up giving re- dresses and clearing the debts, the last bamboo loan was included of course P.s. I would have never known that was even an option without this site, i was pretty clueless back i 2019.
Sara (Debt Camel) says
So you are owqed c £1250 interest from the first three loans. Any 8% interest on that will be tiny. So £1500 max.
The last loan was £4500. You say you have paid £500 to it? How much was paid to it in the IVA?
Lisa Hodgson says
I was just wanting some advice regarding how the 8% interest is calculated. I received a refund from Littlewoods of £907.55 for a BNPL and another £840 for a account charges. Total £1747.55 They have calculated £38.65 simple interest. Does this sound right?
Thanks
Sara (Debt Camel) says
when were these BNPLs? what is your current balance on the account?
Lisa Hodgson says
Hi Sara
My balance on account was £1543 to date. This did not include the BNPL as I settled the BNPL the following month after the interest was added using another loan this was in January 2019. The additional charges are from pre Jan 2020 but no earlier than 2007.
Sara (Debt Camel) says
so this is an offer Littlewoods made directly to you?
what are the charges being refunded?
Sam says
Hi, not sure if an in the right thread ….. I have been misold an insurance policy . I have paid £40.31 every month for 12 years exactly . What sort of interest would that repayment accrue ? Thank you in advance .
Sara (Debt Camel) says
This isn’t a topic I cover on this blog.
Sam says
Hi , the ombudsman have said it’s been misold , I wondered , if I get a refund from the insurance company plus 8% , would that be around £480 over 12 years on top of premium refund ?
Sara (Debt Camel) says
has the Ombudsman said to refund all the premiums?
Sam says
No comment further yet , just a phone conversation so far . Essentially I was sold a life assurance policy for ex husband ( as he wouldn’t take one out ) which in the event of his death would repay my mortgage . Always felt safer knowing the children wouldn’t lose their home . After 12 yrs I found out I wasn’t down as a beneficiary. Have had a letter – but actually now realise it was from an investigator , the company ( a F Advisor) have asked for adjudication from an ombudsman , however I have got lots of paperwork clearly showing what I thought is bought and the investigator agreed. I paid £ 40.31 monthly since April 2010 . Can’t get my head around the amount I would get back if the ombudsman agrees with their researcher . It makes me feel sick to think that I was never covered and often struggled to make payments . Thanks in advance . V much appreciate you reading this .
Sara (Debt Camel) says
If all the premiums are to be refunded (and I can’t comment on whether that will be the decision) then you will get back roughly 5760 in premiums plus about £2500-3000 in 8% interest.
Sam says
Thank you really appreciate comments and response .
X says
Hi Sara,
I might have already posted it in a different thread/page but I think this one is a better place for it. I want to clarify the 8% simple interest as it looks too low to me given the total interest – please see below 2 loans from the same provider:
– Loan 1 taken in May 2019, settled in Dec 2020 – total interest paid £1050
– Loan 2 taken in Dec 2020, settled in Jan 2022 – total interest paid £300
Total Interest refund due: £1350
8% simple interest calculated as : £68
Thanks,
Sara (Debt Camel) says
how large was loan 2? what were the monthly payments?
X says
Loan 1 was £3000 for 18 months, approx. £225 per month, total repaid £4050
Loan 2 was £1500 for 12 months, £150 per month, total repaid £1800
Sara (Debt Camel) says
yes that looks a bit low.
The refund on the first loan clears a lot of the second loan immediately. Then the first 3 months payments clear the rest. So the 8% should start from April 2021 so you should get over £100.
X says
Thanks, I will ask them about it.
Mandy says
Hi Sara
I have been refunded £1137 by Tesco credit card, this has cleared the card £348 and the rest has been put in my bank, I have had this card since oct 2018, they have given me £11 interest does this sound right to you?
Copy of calculation below
Dear Mrs Bean,
Tesco Bank and the Financial Ombudsman Service
Thank for your patience while your complaint was reviewed by the Financial Ombudsman Service. Following receipt of your acceptance, have arranged for your payment to be made in full and final settlement of your complaint. Part of the refund has been used to clear your account balance, with the remaining sent to your nominated bank account. A breakdown of the interest and charges is included, and details of the 8% interest payable is below:
Transactional interest and
£1,137.12
charges
Gross 8%
£11.17
Interest
Less income tax
£2.23
deducted
Net interest paid
£8.93
Total paid to you £1,146.05
P
Sara (Debt Camel) says
Has your balance been about £48 for a long while – or has it recently been a lot more?
Mandy says
It was £3500 until March 2021 then they dropped it to £350 limit
Sara (Debt Camel) says
so since March 2021 your balance (not the limit) has always been less than £350?
Mandy says
Yeah it’s been £350 or a bit less since March 2021, I paid the card off (£3500) in March 21 as I got some money enough to clear it, then Tesco immediately dropped the limit to £350, and I’ve had that balance since then which has always been used
Sarah says
Hi Sara
I wanted some advice regarding my car finance. I borrowed 16000 over 60 months 9.9% interest. I raised an affordability complaint which was upheld. The balance outstanding is 3000- They said they can write on the balance. They haven’t offered 8% interest – is that because there’s an outstanding balance
I asked them for compensation for the stress they have caused me over the years which they have refused. I have decided not to accept any of their offers and take to the FCA
I’m hoping to pay my remaining balance off in the next few weeks
Will this affect my compensation ?
Sara (Debt Camel) says
How much have you paid so far?
Lisa says
Hi there. I’ve made a claim to Ford credit for an irresponsible lending on a car finance I took out in 2017. They have upheld my complaint and am sue a refund of around £3900. Do I add 8% interest per year on the £3900?? So £3900-8%= £312x 6(years)=£2028 is that correct??
Sara (Debt Camel) says
312*6=1872 not 2028
But it depends when you paid the money that is being refunded. The deposit was presumably at the start so 6 years ago. But the interest would have been paid more recently so it would get less 8% interest added
Lisa says
Hi Sara thank you and apologise for the mid calculation. I fell into arrears so the debt went over to link which I’m still paying to date. But balance is around £400. Ford has said they will not clear the balance so I will have to do that with the refund which is fine. Do they have to pay the 8% interest tho??
Sara (Debt Camel) says
if you send it to the ombudsman then FOS almost always says the 8% interest should be added. I suggest you ask Ford why they haven’t done this.
Lisa says
I did pay the deposit at the start of the finance so may 2017. I have a balance of around £400 left to pay but they are saying I will have to clear the balance myself with the money that is being refunded. I feel into arrears so it went over to a company called link whom I’m still paying 30 a month to but with the refund I shall definitely clear the balance.
Abigail says
Hi, I took out a loan with salary finance and two top up loans. Totalling £11,000. The first loans was taken out in March 2021
I stopped making repayments earlier this year but my total repayments to date totalled 10,256.09.
FOS upheld my complaint and said to refund all interest and add 8% simple interest on all the interest added from the date the loan was taken out.
SF removed all interest paid which totalled £4448.60 and this went towards credit towards my balance. This was easy to work out as just working out my total loan minus what has been paid so far. Left a balance of £743.91. However SF said they would not be adding the 8% simple interest as I had not fully repaid the loan. However I went back to my investigator at the FOS who has said they need to work out the interest on all payments made since the loan was taken out and also add this to the interest amount refunded. I worked out my repayme below but can just want to know if it is correct? As the loan was taken out in March 2021 and I stopped making repayments in March 2024, that was around 3 years (1095 days) and the total interest added was 4448.60.
Below are my calculations:
Sara (Debt Camel) says
There isn’t anything I know that clearly sets out how the 8% calculations should be made. What SF are saying is quite common.
Abigail says
The FOS investigator went back to them and said they need to add the 8%. As they originally added a £200 distress and inconvenience payment but SF went back and said they did not think this was fair as the 8% simple interest was compensation enough. So it was removed based on the 8% being added.
Are these calculations correct:
So based on my calculations the 8% simple interest = 4448.60 x 1095 x 8 divided by 36500 = £1067.66
Would that 1067.66 then clear the £743.91 balance and then leave a refund of around £323.75.
Granted the lender would pay tax on this. But have I worked this out correctly? Please help, as myself, the lender and FOS have been going back and forth on this
Sara (Debt Camel) says
“So based on my calculations the 8% simple interest = 4448.60 x 1095 x 8 divided by 36500 = £1067.66”
no that isn’t right. That assumes that you paid all the 4448 in interest right at the start of the first loan, whereas it would have been spread over the last 3 years, with nothing at the start at 4448 at the end.
If the interest had been spread smoothly, that would halve the 8% interest, so c £530
But actually the interest would have been less at the start and more later as the top up loans were added. I can’t guess at the effect of that but it could easily take it down to £200-300. Could be more, could be less.
One thing to cut through all this is if you are prepared to accept the £200 for distress and inconvenience – SF can’t have it both ways – they cant say they don’t want to pay that because they are paying 8% interest and then say there is no 8% interest…
Abigail says
The £200 distress and inconvenience payment was removed by FOS as SF went back and said this was not fair or reasonable due to the removal of interest and the 8% being added.
I would be happy to accept the £200 payment however it was removed by FOS as the removal of interest and 8% interest seemed fair enough. I will go back and ask for it to be added or ask for it to go to the adjudicator