Interest Breakdown
When submitting our claims, we request an additional payment of 8% interest to be added by the bank, on top of refunding the money you have lost. The interest is essentially compensation for you having to take the case to the Financial Ombudsman Service (FOS), as the bank incorrectly refused to reimburse you for the fraud.
This is a simple interest that is calculated annually at 8%. Depending on your circumstances, this is either from the date that you made the payment until they pay you your refund, or the date that the bank initially refused to refund you up until they pay you your refund.
This means that when we notify you that your case has been successful, we are not able to calculate the exact amount that the interest will be, as it will continue accruing until the bank arranges the refund to be paid you. Each day that goes by will accrue a little bit more interest.
Sometimes that interest is added across all money recovered, but in other instances it is only added to some of your refund, as it depends on how you funded your payments.
If you are awarded interest, the bank will also consider any tax implications. Therefore, they may deduct taxes before making repayments to you. The bank should write to you with a breakdown of the exact figures. If they do not, you can request this from them.
An example of how the 8% interest is applied
This is an example of how the 8% would be calculated on a refund amount of £1,000, if the fraud payment was made 6 months before the bank refunded.
£1,000 x 0.08 = £80 interest (this would be the 8% annual interest total)
£80 ÷ 2 = £40 interest (this would be the final interest amount, as it would be 6 months interest)
To do the calculation, you can use the following guide
Refund award x 0.08 (8%) = Total interest for one year
Total interest for one year ÷ 365 days = Total interest for one day
Total interest for one day X amount of days from the transaction until the refund date = Total interest awarded.
Interest amount awards can differ
If you have lost money from your account, but the money was originally in a savings account or you had taken out a loan to fund the payments, the interest amount will not be 8%.
If you have used money from a savings account, it is likely that the interest you will be awarded will be the same as the savings account rate rather than 8%. Therefore, if your savings account interest rate is 1%, this is also the interest rate you would be awarded with your refund.
If you have taken out a loan to fund the payments, it is likely that the interest awarded will be the same rate as the loan interest. This is because the bank should help you get back to the same situation as you were in before the money was lost.
Interest is not always awarded
In some cases, the bank or the FOS do not offer any interest on payments. This will happen if you borrowed the money off family or friends to fund the payments during the scam.
Unfortunately, if you borrowed the money from friends or family, you will not be entitled to any interest additionally to the refund. This is because the bank/ FOS are putting you back into a position that you would have been in had you not lost the money. Had you not been involved in a scam, the funds would not have been in your possession and you would not have accrued any interest on the money.
You can request not to have interest awarded in your claim
If for any reason you would like to request that additional interest is not considered in your case, please let us know.
We can adjust our contracts to reflect this, and as all our complaints are bespoke, we can request that they do not add the 8% interest to the settlement of your claim.
