Upheld: lack of clarity in interest calculation explanations; interest application methodology complaint against Vanquis Bank Limited

Decision detail

Summary

Mr K complained to Vanquis about how interest was being applied to his credit card balance transfers undertaken in 2022 and 2023. He believed that if interest had been applied differently, or if an 80/20 payment split had been followed, he would have cleared the balance transfers. Vanquis did not uphold the complaint, and an investigator found the calculations were correct but the firm lacked clarity in explanations. The ombudsman upheld the complaint in part, finding no calculation errors but agreeing that Vanquis's failure to properly explain their methodology caused distress, warranting £150 compensation.

The Ombudsman's reasoning

The ombudsman found that while Vanquis's interest calculations were correct and aligned with their published charging structure and terms and conditions, the firm failed to adequately explain how the calculations were being applied. The ombudsman rejected Mr K's argument that following an 80/20 split would have resulted in lower amounts owed, reasoning that the standard practice of allocating payments to the highest interest rate balance first is more effective and would not have resulted in a better outcome for Mr K. The ombudsman acknowledged that Vanquis's lack of clarity caused distress and inconvenience, warranting compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website