This article will apply to you if:
- you have made an Unaffordable Lending claim against your lender; and
- your lender has written to you to make you an offer of a claim refund.
If a lender offers to pay money into your bank account, to resolve your claim, it can be naturally tempting to accept the offer. The lender may alternatively send you a cheque.
We have seen examples of lenders making an initial small settlement offer in the hope that the offer will be accepted – and the claim closed. The obvious benefit to the lender is that they save themselves from paying out a larger sum, if the claim were to be taken further.
It might be that the offer is to refund only a small proportion of the interest and charges from a long-standing lending relationship. And if the claim is taken further, it is possible that a larger claim refund would be due.
Full and Final Settlement
Lenders will often make their initial offer in “full and final settlement” – meaning that accepting the offer is exactly that: FINAL. After accepting an offer on this basis, you cannot then pursue the claim further to try and get a larger or additional claim refund. So, it is important to think very carefully before accepting an offer on this basis, so as not to regret it at a later stage.
In our experience, the Financial Ombudsman Service will decline to investigate a claim where an offer has already been accepted in full and final settlement of the claim. It means that they won’t look into whether or not you were a victim of irresponsible lending (the ‘merits’ of the claim) because they’ve already decided the claim is not in their remit.
Below are some examples of decisions made by Ombudsmen:
(1) “Where a business has made an offer, that the customer has willingly accepted in full and final settlement of their complaint, this service doesn’t consider it fair to look at such a complaint again.
I am satisfied that the offer made to Mr E was in full and final settlement of his complaint and he accepted the offer on that basis. So, I’m dismissing this complaint without further consideration of the merits.”
(2) “Once a settlement agreement is reached on a complaint, the subject matter of that complaint is closed and it cannot be re-visited or re-considered. This means I cannot look at anything Mr D complained about or had concerns about before.”
(3) “Mrs K first complained that the loan was mis-sold in 2006 and she accepted the bank’s offer at that time to refund the interest and freeze the debt. We can end our consideration of a complaint without reaching any conclusions about the merits where there are compelling reasons to do so. I find there are such reasons here, and – while I realise Mrs K will be disappointed – I agree with the adjudicator that we shouldn’t consider the merits of Mrs K’s complaint about the sale of the loan.
The bank understood in 2006 that the complaint had been finalised, because Mrs K accepted its offer of compensation. We won’t usually consider the merits of a complaint where the complainant has accepted an offer to settle the matter.”
So, you can imagine the regret and disappointment a customer would feel, having accepted an initial offer – and not being able to obtain a larger and fairer offer, due to it already having been accepted.
If Allegiant are assisting you with your claim, we strongly advise that you always send us a copy of the lender’s Final Response letter. We will provide appropriate recommendations to you about any settlement offers, and whether the offers are too low, or whether the offer is the best claim refund you are likely to get.
For more details about what to expect from a claim refund in general, you may wish to read this article: https://allegiant.co.uk/2022/04/money-talk-what-you-get-for-winning-an-unaffordable-lending-claim/