Vanquis is repaying £168,000,000 to over a million customers who had its ROP (Repayment Option Plan) on a Vanquis credit card since 2003.
This refund is being paid because in Vanquis didn’t tell customers about the extra interest they would be paying because of the ROP charges. In February, the FCA (Vanquis’s regulator) decided this meant that the ROP had been missold to every customer because the true cost was not explained to them.
It is this extra interest that customers will get back, not the ROP fees themselves. Full details of the refund are given in this FCA notice.
This refund is automatic, if you are affected you will get a letter, but is there anything you need to do? Yes!
If you are still paying the ROP you should cancel it. Also you need to tell Vanquis if you have moved and you may want to complain if you think you should get a refund of the ROP itself.
How the ROP was mis-sold
The ROP product was supposed to be explained to customers in a sales call by Vanquis. But this call made ROP sound quite cheap – “only” £1.29 per £100 balance.
But it wasn’t explained that this ROP charge was added to a customer’s account as a purchase, so if the customer didn’t repay the balance in full, the next month they were then charged interest on top at the interest rate on their card, which could be 40, 50, 60% or more.
This wasn’t a mistake made in a few sales calls. The FCA says:
In 100 per cent of calls reviewed by the FCA, sales agents did not explain the full cost of the product to customers.
The FCA concludes:
Vanquis failed to make sure customers were informed about the full cost of the ROP when it was offered to customers… Customers are entitled to be told all relevant information when being offered financial products… The FCA found that the firm breached Principle 6 (Customers’ interests) & 7 (Communications with clients) of the FCA Principles for Businesses.
The refunds that Vanquis will be paying
Vanquis has agreed to repay the interest it has added on to the ROP charges since 2003. This is not a refund of the ROP charges themselves, but, for many customers, the interest added was a large amount.
These refunds will stop at the date 30 days after Vanquis wrote to customers with ROP in 2017 saying how much they had been charged and asking if they wanted to continue with the product. So if you got this letter in September 2017, your refund will be for the interest added on the ROP which was charged up to October 2017.
Vanquis issued other branded cards (Argos, Aquis, Black Diamond, Chrome, Granite, NEO, Origin, Progress, Vanquis and Xylo) – any of these may have had ROP, in which case it will be refunded by Vanquis in the same way a “normal” Vanquis card will be. Check your statement or phone up and ask if you have a card and you are not sure if you were paying ROP.
How much will you get?
The total refunds will be c £168 million. It is said that there will be 1.2 million people affected so the average payment will be about £140.
The calculation is complicated and it will be pretty difficult for you to try to estimate this unless you have all your old statements. But some guidelines:
- people who often cleared their card balance may get very small amounts;
- older accounts where there was normally a large balance may get very large refunds as the compound interest will have added up over time;
- you will get a larger refund if you were paying a higher rate of interest on your card.
Two examples of refunds people have received in the last six months show how the “interest paid” can be very different – larger or smaller – than the amount of ROP paid:
- ROP 547, interest paid 237
- ROP 216, interest paid 1184.
Vanquis say “Vanquis has agreed to refund any interest relating to ROP together with 8% statutory interest to cover any period your account would otherwise have been in credit.” I think this means that for any periods where you weren’t paying interest to Vanquis – including after your account was closed – you will get 8% simple interest added to the refund. If you have 8% added, this will be taxable, but the rest of the refund isn’t.
You won’t get less if you have used any of the ROP features
If you are one of the few people that used the interest freeze, or the larger number that used the “lifeline” facility, this shouldn’t matter. The point is you weren’t told what the full cost of the ROP was, so you will still be getting back the interest you paid on the ROP charges.
How will it be paid?
You need to work out which of the following groups you belong to as the refund process is different for each:
- you have an open account with Vanquis The refund will first be used to pay off your current balance and any additional amount will be sent to you by cheque. You will get an email or a letter from Vanquis explaining this after the refund has been credited to your account. There will be a line on your next monthly statement.
- you have closed the Vanquis account The refund will be sent to you by cheque from Vanquis with a letter explaining it. If you were in arrears and agreed on a partial settlement with Vanquis (or with a debt collector managing the account for Vanquis) then your refund will be reduced by the amount that was written off.
- your Vanquis account is being managed by a debt collector This will be refunded in much the same way as (1) except the email or letter you get may come from the debt collector rather than Vanquis.
- your Vanquis account has been sold to a debt purchaser Here the refunds will be calculated in the same way, using the balance that is owing to the debt purchaser. This will apply if the debt purchaser has got a CCJ. The email or letter you get explaining this will come from the debt purchaser not Vanquis.
When will it be paid?
At the start Vanquis said:
- For existing customers, Vanquis will credit the refund to your account within 90 days. If this takes your balance into credit, you can ask for it to be paid to you.
- If you have closed your account, Vanquis will send you a cheque for the refund within 180 days.
On 9 May 2018, Provident (Vanquis’s parent) said as part of a shareholder announcement:
Good progress is being made in building the capability to refund some 1.2 million ROP customers on a timely basis. A pilot into a small segment of customers has successfully been completed and the roll-out of the full refund programme will commence from June 2018.
This doesn’t seem to match with the original suggestions of 90 and 180 days, so we shall have to wait and see.
It would great if you could post a comment below this article when you get your letter or email from Vanquis or from a debt collector, so people get to know that things are actually moving!
What should you do?
Cancel your ROP today!
If you are still paying ROP – I suggest you cancel it immediately so call them on 0330 099 3000 today! It is extremely expensive – it makes PPI look cheap and useful.
When people get into financial trouble, Vanquis has to consider freezing interest on their accounts even if they don’t have ROP – so you may get what most people think was the main benefit of the ROP for free.
You will get the refund automatically
You don’t need to put in a complaint, everyone who paid ROP will get a refund of any extra interest they were charged because of the ROP. Vanquis will calculate the amount and contact you.
Have you moved or changed your name?
If you have moved or changed your name, you can give Vanquis your new details by completing this form . You don’t have to give your Vanquis card number if it is closed and you don’t remember it.
Do not contact a Claims Firm about this
This will not speed up the process. You will get exactly the same amount from Vanquis, at the same time, but would have to give some of it to the Claims Firm.
Should you complain and ask for a refund of the ROP itself?
If you want a “full refund”, not just the extra interest added, complain to Vanquis and say why you think you were mis-sold the ROP. Possible reasons for doing this include:
- you may have thought it was automatically included with your card;
- you have felt under pressure to accept it or you would not have been given any credit limit increases;
- you may have been unaware of it at all;
- you may feel the sales call you had did not properly describe it to you because when you tried to claim (eg if your hours were cut) it was rejected.
NB you should not complain if the only reason is that you don’t think the extra interest was properly explained – you are already getting that extra interest refunded.
You can send this complaint to email@example.com . Put a title such as COMPLAINT re ROP PAYMENTS and make it clear you want a refund of the ROP payments themselves in addition to a refund of the extra interest you have been charged.
If Vanquis say No
If Vanquis refuse to refund the ROP payments themselves, you can send your complaint to the Ombudsman. The FOS’s online form asks you for all the details they need from you. Your actual complaint can be quite short – just a couple of sentences saying why you think the ROP was mis-sold. You may also want to ask Vanquis to send you a copy of the sales call, but this can take a while so don’t delay going to the Ombudsman while you wait for this.
Vanquis may say in their reply to you that your complaint is too old and that the Ombudsman won’t look at it – this is not Vanquis’s decision to make and you should ignore it. Also ignore any references to the “6+3” rule, they can be very misleading. So send your complaint to the Ombudsman if you want to be considered for a full refund and let the Ombudsman make the decision.
In the comments below, several people have put in a complaint after the FCA announcement and received a full refund. So you do this now or wait and see what refund you get and then decide if it’s worth asking for a full refund.