Have you had an email from Vanquis saying it is refunding you some money?
Some people are being given tens of pounds when I think they should get hundreds. And people getting hundreds should be getting thousands!
There were no details of the refund in the email sent to you, so there is no way for you to check it is accurate.
In February, the FCA told Vanquis to give refunds to a million customers who had the Repayment Option Product (ROP) for their credit cards.
I have seen many refunds across a range of financial products and I think these ROP refunds look too small to be correct. So, in the last six weeks, I have been asking Vanquis to explain its approach.
Vanquis has now provided a detailed example on their website. I think there are two major problems with this example.
Vanquis don’t agree and they say that people who have queries should contact them. So it’s time to complain!
This article looks at:
- The story so far;
- The two problems with Vanquis’s worked example;
- How this affects your refund;
- How to complain (with a template letter).
The story so far
Vanquis ROP – a million customers will get refunds – written in February, looks at why the FCA (Vanquis’s regulator) told Vanquis to make these refunds. Also why it is only the extra interest that is being refunded, not the ROP itself.
The first refunds have been paid to customers with active Vanquis accounts in the last few months. Customers whose accounts have been closed will get a refund later.
If you haven’t yet received a refund, yours will probably be coming in a later batch. You can call Vanquis on 0330 099 3105 to confirm this.
Vanquis ROP (1) – are the refunds right? – this article, written in June, has examples showing why the refunds appear surprisingly low.
Vanquis ROP (2) – over limit charges not included in the refunds – Vanquis has said it is not refunding these, even though they will usually have been caused by the ROP.
The two problems with Vanquis’s worked example
Vanquis has now added a detailed example to their FAQs. It’s here, under How is my Repayment Option Plan interest refund being calculated.
I see two major difficulties with this published example. It is possible these may be obscuring other problems as well.
1. Purchases ought to be repaid before ROP charges
In the FAQ it says:
Step 2: Once the cash balance is paid off, any remaining payment is shared between purchases and the Repayment Option Plan in proportion to their balance.
That is wrong.
The ROP was added to your account as though it was something you had bought with your credit card. You were then charged interest on the ROP at the normal rate on your Vanquis card.
But this extra interest was never explained to you, so the FCA says you should be refunded it.
This means that the refund should put you back in the position you would have been if no interest had been charged on the ROP.
The FCA’s rules (CONC 6.7.4) say that where your statement balance is composed of transactions which carry different rates of interest, your monthly payment should be used to pay off the amounts with the highest interest rate first.
So your monthly payments should, in order:
- first be used to clear any cash withdrawals (charged at a higher rate of interest),
- then be used to clear your normal purchases and the interest that has been added because of those (charged at the standard card rate of interest); and
- lastly be used to clear ROP and the interest that has been added because of this (because these should have been charged at 0%).
If this is done, unless you usually repaid all or almost all of your balance every month, the amount of ROP in your balance will continue to get higher.
But Vanquis isn’t doing this. It is dealing with the cash payments first, correctly. But it is then using some of your monthly payment every month to repay the ROP instead of paying off your purchases.
This will make a big difference to many people’s refunds. Compound interest at Vanquis’s high credit card interest rates adds up to a lot of money over time.
I think Vanquis should: rework all the calculations so that ROP (and the additional interest charged because of it) is paid off last.
2. The calculation stops too soon
The second problem is the point at which Vanquis stops the refund calculation.
Vanquis sent customers a letter or an email in late 2016/early 2017 detailing the cost of the ROP and the extra interest being charged. The FCA agreed that Vanquis didn’t have to give a refund for the extra interest charged after a customer received that email, on the grounds that the customer could have cancelled the ROP at that point.
So Vanquis says in its FAQ:
we have stopped the calculation 30 days after sending the email.
But this is unfair.
Suppose that £500 of your Vanquis balance was caused by the ROP charges. And suppose that you read this email, were horrified at the cost of the ROP, and phoned Vanquis up and cancelled the ROP.
This would have stopped your ROP problem getting any worse, but that £500 is still sitting in your balance and you are still being charged interest on it every month. Just cancelling the ROP doesn’t get rid of this accumulated ROP so you should get this ongoing interest refunded to you.
I don’t think what Vanquis is doing is in line with the FCA’s Final Notice, which – in my opinion – Vanquis has misinterpreted.
I think Vanquis should: carry on refunding all interest that relates to any ROP that was charged before the email. This should only end when the refund calculation is made. For ROP payments that were charged after the email, Vanquis doesn’t have to refund the extra interest added on these.
Vanquis don’t think there is any problem
I made these points to Vanquis earlier this week. Paul Rodford, Head of Corporate Affairs, replied:
We are confident that we are doing exactly what the FCA has required us to do in the way that they require us to do it and are complying with the letter and spirit of our regulatory obligations. We are unable to cease to follow the direction from, and agreement with, our regulator at your request. Our focus remains on completing the programme as quickly and as accurately as we can for the benefit of all of our customers. Additionally, as we have previously mentioned, the calculation for customer refunds has been verified by an independent third party to ensure that the calculation is accurate.
This is a simple denial. It doesn’t address my points about the fairness of the refund calculation at all.
How this affects your refund
If you normally repaid your balance in full, you will only get a very small or no refund. And these two calculation issues probably won’t have made a major difference to this.
But for everyone else:
- the first problem will have resulted in a refund that is much lower than it should have been; and
- the second problem, ending the calculation too soon, will have affected you unless your Vanquis account was closed by late 2016/2017.
Look at the examples in here: Vanquis ROP (1) – are the refunds right? They show how some people are getting refunds which look very small compared to what would be expected.
If your refund looks too small – complain!
Cancel the ROP
First, if you are still paying ROP, think about phoning Vanquis on 0330 099 3105 and cancelling it. It is very expensive and less use than PPI was…
You are being given a refund for the previous interest added, but from now on, you will still be charged all this extra interest and you won’t be able to get a refund for it!
Complain to Vanquis
Complain to Vanquis by sending an email to ROPRefundsTeam@email.vanquisbank.co.uk with COMPLAINT as the subject. You want to:
- ask them to look again at your calculation because you think it is wrong;
- ask them to refund any over-limit charges on your account; and
- tell them if you never received an email or letter in late 2016/early 2017 about the total cost of the ROP (some readers say they never had this).
At the same time, think if you have a case for saying that the ROP itself (not just extra interest, because you are going to be compensated for that) was not explained properly to you. If you think the ROP was mis-sold, then you can ask Vanquis to refund that as well.
Here is a template you can use for this email. Change it so it reflects what happened in your case.
If Vanquis rejects your complaint
Vanquis has eight weeks to respond to your complaint. If it is rejected, send it to the Financial Ombudsman. It’s easy to do this using the Ombudsman’s online form which asks for all the details they need (such as how to contact you and whether you have had a reply back from Vanquis.)
The Financial Ombudsman will look at whether you have been treated fairly and can order Vanquis to pay a larger refund if necessary.
And why not add a comment to the bottom of this article? It really helps if people know that others are going through the same process.