A reader asked:
I’ve just received a very interesting letter from Capquest. The letter states they owe ME a refund of two thousand pounds. As you can imagine, this is would be very welcome but I’m wondering if this is legit? I can’t figure out why now, it has literally appeared out of the blue..? Could it be PPI?
People are naturally suspicious about getting an unexpected letter from a debt collector, even if it appears to be good news! I have seen a few references to refund letters arriving in the last few months on various forums – some from Capquest, some from other debt collectors.
UPDATE Just two days after this article was written, it as announced that HSBC will be refunding customers £4m over ‘unreasonable’ debt collection practices. So there are going to be a lot more of this sort of letter going out in 2017!
The Capquest letter looked pretty convincing. It names a specific debt and she remembered having a loan from them that was sold to Capquest and then repaid.
It also gave full details of the refund amount, including adding 8% compensatory interest on and deducting tax. This “extra interest less tax” is what the Financial Ombudsman typically orders for compensation.
So the reader called up and was reassured she was owed money. She is now going to be paid in the next few days!
UPDATE The money was in her bank account 9 days later – no forms to complete or hoops to jump through. One happy reader!
She may also be able to claim the tax that has been paid to HMRC because of some changes that were made last April, see PPI or payday refund? How to get back the tax deducted! which explains who can get a tax refund and how to ask for it.
No reason was given for the refund, just that an error had been discovered. It is very unlikely to be a PPI refund. If a trawl through the lender’s files had suggested she may be entitled to that, the letter would have said so specifically and asked if she wanted to complain. However, as the reader thought she may have had PPI on her loan, she should put in a PPI complaint! MoneySavingExpert has an excellent guide explaining how to do this yourself.
Other letters from debt collectors
Of course, many letters from debt collectors are a lot less welcome…
- if you get a letter from a “tracing company” which doesn’t say what the debt is, you can usually ignore it. See Prime Location Services – should you phone them? for an example.
- have received a letter about a debt which isn’t yours, or where you think you have repaid it, you should reply with a Prove It! letter;
- if the debt is yours, read Help – my debt has been sold to a debt collector which tries to answer the many questions people have about this.