Vanquis will repay c £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 on 27 February, the FCA (Vanquis’s regulator) announced the result of its investigation into ROP and concluded it was missold to every customer because the true cost was not explained to them. Vanquis had not told customers about the extra interest they would be paying, and it is this extra interest that customers will get back.
My page last summer encouraging customers to complain about Vanquis’s ROP was entitled: Vanquis’s Repayment Option Plan – can you get a refund? I am delighted that the question mark at the end of that can now be removed!
This refund is automatic, if you are affected you will get a letter, but is there anything you need to do?
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. And the month after, so this high compound interest could soon add up to more than the original ROP payment.
Let’s be clear – 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.
Although there were more details in the Terms & Conditions, I am pleased that the FCA has clearly said it:
does not accept that the provision of the terms and conditions could ever be sufficient to fulfil Vanquis’ obligations to provide its customers with adequate information about the ROP when it was sold to customers on the sales call.
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 and when will it be paid?
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.
It would great if you could post a comment below this article when you get your letter, so people get to know that things are actually moving!
What should you do?
You will get the refund automatically
You don’t need to put in a complaint, everyone who paid ROP will get a refund. Vanquis will calculate the amount and contact you.
Have you moved or changed your name?
If you have moved, you need to write to them at: Vanquis Repayment Option Plan, PO Box 399, Chatham ME4 4WQ and inform them of your new address so they can contact you. If you have changed your name (for example after you got married) you also need to write to them with the details, including some proof.
Give your full name, date of birth, previous address and (if you know it) your old Vanquis account number.
This may seem like a hassle, but the checks are needed – you don’t want Vanquis to send your cheque to someone else!
Cancel your ROP today!
If you are still paying ROP – I suggest you cancel it immediately – call them on 0330 099 3000 today! It is extremely expensive – it makes PPI look good value for money!
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.
Do not contact a Claims Firm about this!
This will not speed up the process. You will get the same amount from Vanquis, at the same time, but would have to give some of it to the Claims Firm.
If you have already complained, what will happen?
The following are my guesses as to what will happen:
A complaint currently with Vanquis
I expect Vanquis will offer to settle your complaint by refunding the interest on the ROP. For most people, this will be a good offer.
Unless there is something unusual about your case (you are sure you never agreed to the ROP? Vanquis rejected a claim you made on the ROP?) I think it’s unlikely you will get a refund of the ROP itself now the FCA has stated what it thinks the appropriate refund is. But if you aren’t happy you can send your case to the Ombudsman.
A complaint with the Financial Ombudsman
I expect Vanquis will offer to settle all these complaints now by refunding the interest on the ROP. My guess is that the Ombudsman is unlikely to award you more unless there is something unusual
A complaint rejected by Vanquis or the FOS
I expect Vanquis will get back in touch and send you refunds on these rejected complaints too.