Back in 2006 credit card charges were investigated by the Office of Fair Trading (OFT) and it was ruled that the current bank charges for credit cards were too excessive and a threshold of £12.00 was brought into place.
This investigation by the OFT took around 18 months to complete which allowed the credit card companies to begin adjusting their fees or face a full scale investigation – which could have seen lenders forced to reveal the true costs in Court.
In the past credit card charges have been set at levels where many argued the actual costs of the charges did not reflect the associated costs of recovering the debt owed. These credit card charges often took the form of a late payment fee or overdraft charge.
According to the Office of Fair Trading, the credit card fees that have seen millions of families pushed into further debt were ‘disproportionately high’.
The OFT concluded that the default charges (or late payment charges) should be cut to a more acceptable £12. This was subsequently accepted by the banking community and in turn the charges were slashed.
By taking out a credit card you are in effect entering into a contract with the credit card issuer. If you were to breach this contract by making a late payment or exceeding your agreed credit limit then the courts can enforce payment on the debt you owe.
However, the sum of the charge must reflect the actual costs incurred or the default and not exceed the damages the bank has suffered as a result of the breach, otherwise this is classed as a penalty, which isn’t enforceable by the courts.
The argument that the charges exceed the customers losses are not enforceable by law is covered in the Unfair Contract Terms in Consumer Contracts Regulation 19999, Unfair Contract Terms Act 1977 and at Common Law. Some banks argue that these charges are a fee for a service, however if this is the case then they must be reasonable under S.15 of the Supply of Goods and Services Act 1982.
Average Refunds per credit card as we stand are £590.00! If you have had a couple of cards you could be owed thousands of pounds.
You have finally won a lump sum of compensation for your PPI claim, next is what to do with the money. Most people get excited by the sheer amount of the money and within no time, the money is gone with nothing to show for it. Careful planning is therefore important when handling this windfall as it should make you and your family happier.
Pay off pending debts
The smartest way to spend the PPI refund is to settle any debts you may have ran up. Compile all the debts you have and depending on the amount of debt, decide on the ones to clear starting with the high interest ones. If you do not owe much, strive to pay off all your debts as this improves your credit score. Debt often puts people under pressure and being debt free gives you the freedom to live without worries.
Invest in property
Another option would be acquiring assets whose value is likely to go up over time. This is a solid investment choice because you can sell the asset at a profit in the future. You can also buy that family car you have always wanted which distributes the benefits to every family member.
A little home maintenance
Another smart way to spend the PPI claim refund is to improve your home. There are those things you have always wanted to do around your home but the budgetary constraints have been a hindrance. The PPI refund can help in making important home improvements which adds the value of your home and your life in general. It’s best to do it yourself rather than hiring someone to make the changes. Take care of any repairs and maintenance requirements and carry out major house renovations.
Invest in education
Stuffing the money away for your kid’s education is another smart way to spend the refund. Education keeps getting more expensive and most parents are heavily burdened when putting their kids through college. Keeping the money aside for your children’s college education is thus a very smart move as it will eases the burden on the parents.
You can also opt to take that holiday you have always dreamed of. Life is too short to live with regrets. Go have fun, treat yourself and family and make it a trip to remember. Enjoy the best life has to offer and create memories your family will cherish for a long time. Whichever way you decide to spend the PPI refund, have fun while at it and have no regrets.
Do you intend to make a PPI compensation claim? You might have decided to bring the matter to the attention of the Financial Ombudsman. Let us explain to you certain things that you must know before going to this governing body.
What is PPI?
PPI is an acronym for Payment Protection Insurance. This is a kind of insurance procured in connection to a loan, a mortgage or a credit card. The insurance covers expenses when the borrower is unable to pay his or her loan due to medical condition, death, unemployment or any other cause for non-payment of debt. The insurance is covered by the borrower. It is not obligatory for a borrower to buy such insurance. How far back can you claim ppi will depend on a lot of factors usually it is around 6 years but some companies are claiming to be able to recover up to 15 years, so shop around.
This is an agency of financial experts that steps in when individuals and businesses are not able to arrive at a decision on certain financial issues. The services of this agency are free for both businesses and consumers.
Why resort to the Financial Ombudsman
The case of any mis-sold PPI can be taken to the Financial Ombudsman by the borrower when the bank or lender refuses to pay the claim for mis-sold PPI benefits.
How to file a complaint with the Financial Ombudsman
- Know the process of lodging the complaint. Before you go to the Financial Ombudsman, you have to go first to your bank or lending institution. If the bank does not give you a decision after 8 weeks, you can go to this agency.
- If you’re not happy with the response of your creditor, you can ask the office of the Financial Ombudsman to research your case.
- In order to file your appeal with Financial Ombudsman’s, you have to fill a complaint form. This will provide all the details to the PPI transaction. The form is also downloadable.
- You can fill up the complaint form on your computer. If you are doing paper work, you fill-up the form by hand. Send the completed form online or by post.
- Ensure that you have filled up the forms correctly and completely. This will help in the assessment of your case. If you are not sure on how to go about the process, the Financial Ombudsman accepts inquiries at their office.
- After filing the form, you just have to wait for any advice from the Financial Ombudsman.
Knowing the right process can help you speed up your PPI claims process and get your lawful right without problems.