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Credit card lender forced to pay 169m back to customers

Tuesday, 27th February 2018

The Financial Conduct Authority (FCA) has imposed a fine of £1,976,000 on credit card lender, Vanquis, for failing to disclose the full price of an add-on product, called Repayment Option Plan (ROP). The firm will also repay an estimated £168,781,000 in compensation which constitutes the amount of the charges not disclosed to customers when they bought the ROP.

When selling the ROP, Vanquis told customers how the product worked and what the monthly charge was but did not inform customers that the full cost of the product included an interest component where there was an end of month unpaid balance on their credit card.

What exactly is Repayment Option Plan (ROP)?

Since June 2003 the ROP was offered to all Vanquis credit card customers as a way of helping them to manage their account. The ROP was a credit management tool that permitted customers to freeze their credit card account, take a payment holiday for one month per year, utilise a lifeline that would avoid late fees for one month per year, and receive SMS alerts relevant to their account.

Vanquish to pay back eleven years of interest

The FCA has ordered Vanquis to pay back the interest customers were charged on the ROP from 1 April 2014 to when customers were informed of the full cost of the ROP. Vanquis has voluntarily agreed to pay back the interest customers were charged on the ROP from June 2003 to 31 March 2014, because before this time the FCA was not responsible for regulating the consumer credit market.

Sales calls hid the true cost

In 100 per cent of calls reviewed by the FCA, sales agents did not explain the full cost of the product to customers. Although the firm’s sales agents explained that the principal cost of the ROP was a monthly charge of either £1.29 or £1.19 per £100 of a customer’s outstanding balance, they did not explain to customers that the ROP could attract interest at the card rate, which was compounded unless the account balance was paid in full at the end of the month. The APR on the card could vary from 19.9% to 79.9%. Therefore customers did not have all relevant information to make an informed decision when purchasing the ROP.

I'm a previous /current customer of Vanquis, what do I need to do?

Customers who had this product do not need to do anything. They will be contacted by the firm directly in due course. If customers are concerned they should contact Vanquis on 0330 099 3000

You can read the full press release from the Financial Conduct Authority (FCA) here




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