Vanquis Bank to repay cardholders £169 million - ensure you don't miss out

If you had its Repayment Option Plan (ROP) on a Vanquis card – or on another credit card it issued under a different brand, such as Argos or Black Diamond – at any point between June 2003 and 31 March 2014, you could be due a £100+ refund.

The regulator has ruled that Vanquis didn't tell customers that interest would be charged on the cost of the ROP if you didn't pay off the full credit card balance each month, with the APR ranging from 19.9% to 79.9%.

We explain below what's happened and what to do if you're affected. If you want to skip straight to how to get a refund, see how to check if you're owed.

Martin: 'Moved home? You need to let them know'

Martin Lewis, founder of MoneySavingExpert.com, said of the way customers would be repaid: "This is an improved system compared to similar past payouts from CPP and Sentinel, as here you should be paid automatically rather than having to claim. Yet that doesn't mean there aren't hurdles to jump. 

"The big one is they're sending cheques, so do they have the right address? It's important to check to see if you've had a Vanquis, Chrome, Aquis or Argos card or a few others since 2003, and if you did, have you moved home since? If so, ensure you let them know – otherwise you could risk missing out."

What was the Repayment Option Plan?

The Repayment Option Plan (ROP) was an add-on product sold to credit card customers which allowed them to:

• 'Freeze' their account for up to two years, meaning they couldn't use their card but didn't have to make any payments or pay any interest, and their credit rating wasn't affected.

• Use a 'lifeline' to avoid late fees for one month a year.

• Take a payment holiday for one month a year, during which interest would still be added.

• Receive text alerts about their account, for example payment reminders.

If you were employed, the plan cost £1.29 each month for every £100 you owed – it was £1.19/month per £100 if you were unemployed, retired or a student.

Vanquis offered the product to all its credit card customers, as a way of helping them manage their account. It was also offered as a 'white label' product to customers with Vanquis-issued credit cards under a different company's name, including Argos and Black Diamond – see a full list of affected cards below.

What did Vanquis do wrong?

The Financial Conduct Authority (FCA) confirmed it launched a review into the ROP in August 2017 and has now ruled that when selling it, Vanquis explained how the product worked and what the monthly charge was, but DIDN'T explain that the full cost of the product included interest when the credit card balance wasn't paid off in full each month.

The FCA only had the remit to investigate the firm back to 2014, but Vanquis has now voluntarily agreed to repay customers back to 2003.

How much are customers owed?

Vanquis has agreed to refund all the interest paid on ROPs it sold during this period.

So if you're affected you should get whatever you paid in interest between 2003 and 31 March 2014 back. Customers' APRs varied from 19.9% to 79.9%, meaning they could have unknowingly paid more than £100 in interest on the cost of the ROP.

How to check if you're due a refund – and make sure you get it

The FCA says refunds owed to customers will be paid automatically. But if you're no longer a Vanquis customer it's important to make sure it has your up-to-date contact info – so if you think you may be affected, check.

Vanquis also sold the ROP to people with the following Vanquis issued credit cards between 2003 and 2016: Argos, Aquis, Black Diamond, Chrome, Granite, NEO, Origin, Progress and Xylo.

If you think you may have had the ROP over that period, check old statements. If you're unsure, contact your credit card provider and ask it to check its records. Though it will be Vanquis that pays you back.

Here's how refunds are being issued:

• If you still have the credit card you bought cover for... You shouldn't need to do anything and should get your money back within 90 days. The refund will be added as a credit to your account.

• If you no longer have the credit card you bought cover for... Vanquis says it will contact you about repaying your cash. You'll be paid by cheque and should get your money back within 180 days – we're checking whether Vanquis will send you a cheque directly or will first write to you and ask for additional info.

• If you've moved home since you had the credit card you bought cover for, you MUST make sure Vanquis has your current details. That's to make sure it sends the refund to the right address.

  Vanquis has now confirmed you can update your details using this form on its website.

What does the FCA say?

Mark Steward, director of enforcement and market oversight, said: "Vanquis failed to make sure customers were informed about the full cost of the ROP when it was offered to customers. Most Vanquis customers chose the ROP to help manage their credit without realising instead that the product might lead to their indebtedness increasing.

"Customers are entitled to be told all relevant information when being offered financial products. These were very serious breaches. 

"Vanquis has decided now to do the right thing by acknowledging the wrongdoing and offering to compensate its customers. We are pleased the firm has extended the compensation to customers who purchased the ROP before we took responsibility for regulating the consumer credit market."

An FCA spokesperson declined to say if any other firms are being investigated over similar products.

What does Vanquis say?

Vanquis stopped selling the ROP in April 2016, but says it is now working with the FCA to begin selling it again.

A Vanquis spokesperson said: "The FCA believes that Vanquis should have been more explicit when discussing ROP over the phone, that the product was a purchase transaction, and as such would attract interest in the event the customer didn't pay their bill in full. 

"We recognise that this call could have been clearer and apologise to all impacted customers where we fell short of the high standards that we set ourselves.

"As a result the FCA and Vanquis agreed that Vanquis will refund interest charges that customers have paid on ROP. Vanquis has also been fined just under £2 million. Our aim now is to put things right as quickly as we can by refunding the interest element of ROP to customers."