Have you had an email or a letter from Vanquis saying it is refunding you some money? In late 2018 tens of thousands of people are getting these refunds.
Nice? Yes, but it may be too low…
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 or letter sent to you, so there is no way for you to check it is accurate. I have seen many refunds across loans and credit cards and I think these ROP refunds look too small to be correct.
Vanquis has provided a detailed example on its 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!
The background to these refunds
In February, the FCA told Vanquis to give refunds to a million customers who had the Repayment Option Product (ROP) for their credit cards. This is because you were charged interest on the ROP and Vanquis never explained this to you – so Vanquis should refund all the extra interest you paid.
For more details, read my article Vanquis ROP – a million customers will get refunds.
The first refunds started to be paid to customers with active Vanquis accounts in May and June. But they looked surprisingly low…
I had seen a lot of customers complain about ROP in 2017 so I knew what the refunds they had received. Those 2017 refunds also included the ROP itself – but that didn’t account for why the 2018 refunds are so much smaller.
The two problems with Vanquis’s detailed example
In August Vanquis finally published a detailed example in the 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 there may be other problems as well.
1. Purchases should be repaid before ROP charges
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 simply 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 the interest – that is the same as saying no interest should have been charged.
The FCA’s rules (CONC 6.7.4) say that where your card 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 as they are charged at a higher rate of interest.
- then be used to repay what you bought with the card and the interest that has been added because of those – these are charged at the rate of interest of your card which may have been 39%, 49%, or even more.
- lastly be used to clear ROP and the interest that has been added because of this, because these should have been charged 0% interest.
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 in its calculation Vanquis isn’t doing this. Instead it is using some of your monthly payment to repay the ROP instead of using it all to pay off your purchases.
This may sound technical but it makes a huge difference to many people’s refunds. Compound interest at Vanquis’s high credit card interest rates adds up to a lot of money!
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. They 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;
- the second problem, ending the calculation too soon, will have affected you unless your Vanquis account was closed by late 2016/2017;
- and there is a third problem than Vanquis are not refunding overlimit charges, even though those would have been cause by the extra ROP interest – that’s not fair.
How to complain!
Look at the examples in here: Vanquis – are the refunds right? They show how some people are getting refunds which look very small compared to what would be expected.
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 their job to decide what is fair in situations like this. The Financial Ombudsman can order Vanquis to pay a larger refund if necessary.
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 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.