# Is there any legal precedent for compensation where someone has been overcharged?



## Brendan Burgess (13 Jul 2016)

I have seen a few cases where the Ombudsman has ordered the lender to give a tracker back to a borrower. In all cases, they got a refund of the overcharge, but no more. 

Presumably there must have been cases in the High Court where people got lenders or other companies to refund overcharges?  Did they get additional compensation? 

Some ptsb borrowers are saying "I have undergone huge stress, my marriage collapsed, I have been off work due to depression solely due being overcharged by you". 

It seems that ptsb is responding to such claims: "You got 10% of the overcharge as compensation. You have not shown that your stress was due to our mistake, so we are paying you no more". 

How are such claims and defences regarded by the courts?

I don't think it should be ptsb vs. the borrower.  There should be some guidelines which both side could use. The borrower should be able to say "Here are the Central Bank/High Court/Ombudsman's guidelines in these cases. I meet the criteria. Give me compensation."


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## Brendan Burgess (13 Jul 2016)

OK, I have found the UK's Financial Ombudsman's guidelines in such cases 

*compensation for trouble and upset *

As well as looking at whether someone’s lost out financially as a result of a mistake, it’s important to recognise the emotional or practical impact it’s had. This “non-financial”impact could be:


distress – including embarrassment, anxiety, disappointment, loss of expectation, upset and stress. There may be some overlap with pain and suffering (see below) – for example, if the distress made someone ill;

inconvenience – including the time someone’s spent and/or effort they’ve had to go to as a result of a  business’s mistake;

pain and suffering –including physical or mental suffering arising from what a business has done; or

damage to reputation – where someone’s personal reputation has been negatively affected as a direct result of a business’s actions.


*how do we decide whether to make an award?*
When we’re deciding how to sort out a complaint, we always consider whether it’s fair to award this type of compensation. It isn’t intended to fine or punish a business – which is the job of the regulator. But when something’s gone wrong, a business’s recognition of the emotional and practical impact can make a real difference – and help their customer move on from what’s happened.

If we decide a business has acted unfairly, we consider the impact on their customer. We’re all inconvenienced at times in our day-to-day lives – and in our dealings with other people, businesses and organisations. For us to award compensation, we need to decide that the impact of a business’s actions has been bigger than just a minor inconvenience or upset.

The fact that a phone line is busy or a name spelt incorrectly can be annoying – but we’re unlikely to tell a business to pay compensation for either unless they’ve have a significant impact on a particular customer.

There are also certain events that are likely to have an emotional impact on someone, whether or not something else goes wrong. For example, making an insurance claim following a death or injury is likely to be distressing. And things like car accidents or break-ins will be inconvenient and upsetting. But these events themselves aren’t the fault of the business – so it’s unfair to ask a business to pay extra compensation to make up for them. 

*how much compensation should there be? *
In some cases, it’s enough for us to tell the business to apologise or take some other practical action to put things right – like correcting a credit file. But in other situations, we think that financial compensation is the way to put things right fairly.

We won’t give a set award for each individual error a business made – and add them together to get a final number. Instead, we look at everything that has happened – and then take a step back and assess what we think would be fair compensation overall.

Case study 1 and case study 2 show how the same situation could have a considerably different impact on different people. 

*do we award compensation for people’s time?*


Occasionally, we decide that the time someone has spent trying to resolve their complaint means they should be awarded compensation for their time.

We usually ask people to provide evidence of the time they’ve spent. And to decide a fair amount of compensation, we’ll consider the overall impact that spending this time had on the consumer. We won’t usually award compensation for specific “units” of time (although there have been a few cases where we decided this was necessary).

Compensating someone for their time isn’t the same as refunding any costs they incurred when making a complaint – such as the cost of postage or phone calls. These are a financial loss to someone – money they’ve spent trying to resolve the complaint.


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## Brendan Burgess (13 Jul 2016)

*examples of awards*
On the face of it, some complaints might seem similar to others. But every customer and every complaint is different – and compensation needs to reflect the impact on the individual people involved.

These are examples of awards we might make and why. We’ve set these out in different categories and levels – to show the range of awards we make. But these are only guidelines, and there are times when it’s fair to make a different or larger award.



*
moderate (less than £500):
click to expand

substantial (£500-£2,000):
click to expand

severe (£2,000 - £5,000)
click to expand

extreme (£5,000 or more):
click to expand
*

*case studies and examples of awards*
*case study 1*
The business sent Mr B’s bank statement to the wrong address – meaning that a third party had access to some of his personal and financial information. But the third party returned the unopened statement to the business. Mr B was worried but no harm was caused.

The business reissued the statement to Mr B’s correct address, apologised for its error and offered an amount at the lower end of our moderate band, which we thought was fair.

* case study 2*
The business sent Miss C’s mortgage statement to the wrong address – her previous address, which now belonged solely to her ex-husband. As a result, Miss C’s  ex-husband knew her new address – and went on to break into her home. Miss C was assaulted and had to spend five days in hospital.

Although the error seemed relatively minor on the face of it, the impact was considerable. So we said a much larger award for the severe physical harm and distress Miss C suffered was appropriate.

* case study 3*
Mrs D’s bank made an error processing her monthly standing order, set up to pay her credit card bill. Although the money left her account, it wasn’t paid into her credit card account.

Mrs D frequently checked her statements online, and noticed that the payments hadn’t been made. So she immediately made a manual payment to cover the minimum amount before the end of the month. She also made a manual payment the next month when the same thing happened.

After investigating the complaint, the business accepted full responsibility. It apologised, refunded the money (plus interest) to Mrs D’s account and offered a moderate award for the inconvenience it caused. It also thanked Mrs D for being so understanding and taking steps to avoid additional problems.

By making a payment, Mrs D had avoided being charged by her credit card provider and also avoided late payment information being added to her credit file. This meant it was much easier to resolve the issue and had much less of an impact on Mrs D than if she hadn’t taken any action. We agreed that the business’s offer was reasonable.

* case study 4*
Mr E reacted differently to the same situation, making the impact on him much worse.

Even after Mr E was aware of the problem, he refused to make a manual payment despite having money spare to do so. His account consequently defaulted and this affected his credit file. Because Mr E hadn’t tried to minimise the consequences of the missed payment and could have done, we didn’t think it was fair to hold the business responsible for his account defaulting.

We made a moderate award in this case. We might have awarded more if Mr E had tried his best to avoid the credit file issues but was unsuccessful.

* case study 5*
Mr F was unhappy that his insurance provider had taken almost five months to settle a claim on his home insurance policy following damage caused after a break-in.

Mr F needed the money to put right the damage and replace items that were stolen. Until the claim was paid, it was a distressing time for Mr F – who had to live with the damage as a constant reminder of the break-in.

However, we found that the business hadn’t been solely responsible for the amount of time it had taken. The business had to chase Mr F for information it needed to assess his claim – and Mr F took over three months to provide the business with this information. So while Mr F was clearly upset about his situation, we didn’t think the business was responsible for the delay and didn’t award compensation.

* case study 6*
An estate agent’s business account was wrongly frozen by the bank. This meant that incoming and outgoing payments – including rent payments from tenants to its landlord clients – were stopped.

The estate agent spent a great deal of time trying to resolve the matter with the bank directly. And it also spent time and effort assuring its clients that the issues weren’t due to any financial difficulty or potential insolvency.

We asked the bank to write to the estate agent’s clients to confirm that the problems were caused by its error and weren’t the fault of the agent. And for the inconvenience caused to the limited company, we made an award at the top end of our moderate band.

* case study 7*
Mr J was in a car accident with a third party and he made a claim on his insurance. Unfortunately, administrative errors by the insurance company meant a county court judgement was issued against him.

We said it was fair to compensate Mr J for the unnecessary and excessive worry the mistake caused. And we also thought it was reasonable to compensate him for the embarrassment and damage to his reputation, especially because he worked for the police. We made an award in our substantial band.

* case study 8*
Mr and Mrs G complained that they’d been mis-sold payment protection insurance (PPI) on a loan. Mr and Mrs G thought the policy covered the full term of the loan, but when they made a claim they found it only covered the first three years. The claim was turned down, meaning Mr and Mrs G had to find another way to make the loan repayments.

We decided the policy had been mis-sold to Mr and Mrs G and made an award to compensate them for the financial losses they’d had as a result. But we also recognised that when Mr and Mrs G’s claim was rejected unexpectedly, they were disappointed and anxious about how they’d be able to meet the loan payments. In the end they’d had to borrow money from friends and family, which caused them inconvenience and embarrassment. So we recommended an award in the mid-range of our moderate band.

* case study 9*
Mrs H was retired, with a modest pension income and no investments apart from a small amount in a savings account. When her husband died, she received money from a life insurance policy.

When visiting her local bank branch to pay in a cheque, Mrs H was invited to speak to one of the bank’s financial advisers to discuss how she could get a better return on her savings. The adviser recommended she invest around three-quarters of her money in a stocks and shares ISA.

Two years later, Mrs H found out that the ISA was only worth two-thirds of the original investment. She complained that she hadn’t wanted to take any risks with her savings – and that the adviser hadn’t warned her she could lose money.

We decided the investment was unsuitable for Mrs H and awarded compensation to put her in the position she’d be in if she hadn’t been mis-sold the ISA. We also recognised that she was very distressed at losing a large part of her emergency savings – and the uncertainty she’d had not knowing whether she’d get it back. She was particularly upset because the money had been left to her by her husband to make sure she could manage on her own financially.
We also awarded compensation at the lower end of our substantial band for the unnecessary distress Mrs H had experienced as a result of the mis-selling.


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