CONRED 6.4 Fourth and fifth steps: calculating and paying redress

1. (a) a high commission arrangement that was also a very high commission arrangement; and
2. (b) either or both of:
   1. (i) a tied arrangement;
   2. (ii) a discretionary commission arrangement.

1. (a) ‘A’ is the total amount of commission payable; and
2. (b) ‘B’ is compensatory interest on that amount, calculated using the approach in CONRED 6.4.34R, applied from the date the consumer entered into the motor finance agreement until the date of redress payment.

1. (a) calculate the commission repayment remedy in accordance with CONRED 6.4.4R;
2. (b) calculate the total APR adjustment in accordance with CONRED 6.4.8R to CONRED 6.4.14R;
3. (c) apply the amounts calculated under (a) and (b) to the hybrid formula in accordance with CONRED 6.4.16R;
4. (d) calculate the adjusted commission plus interest cap, the adjusted realised cost of credit cap, and, where applicable, the total realised cost of credit cap in accordance with CONRED 6.4.19R to CONRED 6.4.21R; and
5. (e) apply the caps where necessary to determine the amount of redress payable to the consumer under the hybrid remedy in accordance with CONRED 6.4.22R.

(5) The amortisation formula is:

1.                                   M = (P × r) / (1 – (1 + r) ^-n)

where:       

1. (a) M = monthly payment;
2. (b) P = principal (amount borrowed);
3. (c) r = monthly interest rate (which is the annual percentage rate of charge paid by the consumer under the motor finance agreement divided by 12); and
4. (d) n = total number of monthly payments (term in months).

1. (a) ‘A’ is the consumer’s payments under the motor finance agreement calculated in accordance with CONRED 6.4.10R; and
2. (b) ‘B’ is the corresponding market adjusted payments calculated in accordance with CONRED 6.4.11R.

1. (a) substituting the annual percentage rate of charge in the consumer’s payment schedule (stage 1) with the 5th percentile annual rate of charge set out in the table at CONRED 6.4.7R for the year in which the motor finance agreement was executed; and
2. (b) recalculating each payment made under the agreement using that rate.

1. (a) ‘A’ is the consumer’s payments under the motor finance agreement (stage 1); and
2. (b) ‘E’ is the corresponding 5th percentile annual rate of charge payments calculated at stage 2.

1. (a) ‘A’ is the total value of all actual payments made by the consumer under the motor finance agreement minus the total amount of credit; and
2. (b) ‘B’ is compensatory interest on that amount calculated using the interest rate formula in CONRED 6.4.34R(2)(a) and (3) to (5), applied from the date the consumer entered into the motor finance agreement until the date of the redress payment.

1. (a) a high commission arrangement that was also a very high commission arrangement, assessed in accordance with (2); and
2. (b) either or both of:
   1. (i)  a tied arrangement;
   2. (ii) a discretionary commission arrangement.

1. (b) The total redress is the sum of the amounts calculated in (a).

1. (a) (i)  the commission repayment remedy in accordance with (4) and the total APR adjustment in accordance with CONRED 6.4.9R to CONRED 6.4.14R, for each motor finance agreement; and
   1. (ii) redress under the hybrid remedy, by applying the amounts in (i) to the hybrid formula in CONRED 6.4.16R for each motor finance agreement and then calculating the sum of these amounts;
2. (b) the adjusted commission plus interest cap in accordance with CONRED 6.4.19R, for each motor finance agreement and then the sum of these amounts;
3. (c) the adjusted realised cost of credit cap in accordance with CONRED 6.4.20R for each motor finance agreement and then the sum of these amounts;
4. (d) the total realised cost of credit cap in accordance with CONRED 6.4.21R, where this can be calculated for all motor finance agreements, and then the sum of these amounts.

1. (a) an offer is made to the consumer in accordance with CONRED 6.2.7R; or
2. (b) redress is payable under either the commission repayment remedy (CONRED 6.4.4R) or the hybrid remedy (CONRED 6.4.22R).

1. (a) has provided evidence that they had disputed the arrears or default sums prior to the date of the provisional redress decision and this matter had not been resolved by the lender or by some other means; and/or
2. (b) has demonstrated that if set off is applied, the consumer would not be able to meet their priority debts.

1. (a) first, consider information and data contained in primary records of the type set out in CONRED 6 Annex 1.1G(1) and (3); and
2. (b) then, where appropriate, consider whether reasonable assumptions can be made regarding the consumer’s motor finance agreement by relying on contemporaneous records of the type described in CONRED 6 Annex 1.1G(4).

1. (a) the year of the transaction;
2. (b) the type and value of the vehicle purchased, bailed or hired;
3. (c) the amount of credit obtained; and
4. (d) the cost of that credit relative to the value of the vehicle.

1. (a) the median of the annual percentage rates of charge under all motor finance agreements entered into by the lender following an introduction effected by the relevant credit broker in the financial year the motor finance agreement was entered into; or
2. (b) where (a) is not available, an annual percentage rate of charge which is the median annual percentage rate of charge under all motor finance agreements from a credit broker to whom the lender offered the same or sufficiently similar terms of engagement or business for the financial year in which the motor finance agreement was entered into.

1. (a) a commission amount which is the median of the commission amounts under all motor finance agreements entered into by the lender following an introduction effected by the relevant credit broker in the financial year the motor finance agreement was entered into; or
2. (b) where (a) is not available, a commission amount which is the median annual commission amount under all motor finance agreements from a credit broker to whom the lender offered the same or sufficiently similar terms of engagement or business for the financial year in which the motor finance agreement was entered into.

1. (a) adopt a value using a motor valuation guide such as AutoTrader, CAP, Percayso and Glass’s for the relevant motor vehicle and the relevant year, deducting 10% to reflect a typical deposit payment; or
2. (b) where the relevant year is not available in the motor valuation guides in (a):
   1. (i) contact either a relevant third party such as a credit reference agency or take all reasonable steps to contact the consumer to obtain this information; or
   2. (ii) contact both a relevant third party and the consumer where enquiries under (i) have not resulted in the lender obtaining the total amount of credit; and
3. (c) where the lender has not managed to obtain the information as a result of enquiries in (a) or (b), use a motor valuation guide of the type specified in (a) to adopt a value for the relevant motor vehicle based on the closest year the lender can obtain a valuation for at the point at which the consumer entered into the motor finance agreement, deducting 10% to reflect a typical deposit payment.

1. (a) the first day of the month in which the lender has evidence of the consumer first making a payment or charges applying under the motor finance agreement; or
2. (b) if there is no evidence of the first payment or initial charges, the day ‘X’ months before the date the last regular payment was due under the agreement, where ‘X’ is the term of the agreement in months; or
3. (c) where it is not possible to determine the start date or execution date in accordance with (a) or (b):
   1. (i) for new motor vehicles, the first day of the time period associated with the vehicle’s registration, namely:
      1. (A) 1 March for vehicles registered between 1 March and 31 August; and
      2. (B) 1 September for vehicles registered between 1 September and the last day of February; or
   2. (ii) for used or second-hand motor vehicles, any information that indicates when the credit broker acquired the motor vehicle, such as date of purchase; or
   3. (iii) where it is not possible to determine the start date or execution date in accordance with (i) or (ii), 48 months prior to the date the last regular payment was due under the agreement.

1. (a) the last day of the month in which the lender has evidence of the consumer making a final payment or final charges applying under the agreement; and
2. (b) the day 48 months after the start date or the date the agreement was executed.

1. (a) the last day of the month in which the lender has evidence of the consumer making a final payment or final charges applying under the agreement;
2. (b) if there is no evidence of the final payment or final charges, the day ‘X’ months after the start date or the date the agreement was executed, where ‘X’ is the term of the agreement in months;
3. (c) if it is not possible to determine the end date in accordance with (a) or (b), the day 48 months after the start date or the date the agreement was executed.

1. (a) the actual annual percentage rate of charge multiplied by 0.79; or
2. (b) (i) the median of the minimum rates under all motor finance agreements entered into by the lender following an introduction effected by the relevant credit broker in the financial year the motor finance agreement was executed; or
   1. (ii) where (i) is not possible, the median of the minimum rates under all motor finance agreements from a credit broker to whom the lender offered the same or sufficiently similar terms of engagement or business for the financial year in which the motor finance agreement was executed.

1. (b) In relation to the total APR adjustment calculations and the adjusted realised cost of credit cap, the lender must:
   1. (i) for each payment differential in the schedule in CONRED 6.4.12R and CONRED 6.4.20R(3), identify the date the payment differential occurred and the date of redress payment to create a list of interest periods; and
   2. (ii) divide each interest period in (i) into calendar year segments.

1. (a) identify the compensatory interest rate from the table in CONRED 6.4.35R that applies to that year;
2. (b) calculate the number of days for which that rate applies in that calendar year; and
3. (c) apply the formula in (4).

1. (a) the principal is either:
   1. (i) the total amount of commission payable, when calculating interest in relation to the commission repayment remedy; or
   2. (ii) the total realised cost of credit calculated in accordance with CONRED 6.4.21R, when calculating interest in relation to the total realised cost of credit cap; or
   3. (iii) each payment differential set out in the schedule produced in accordance with CONRED 6.4.12R, when calculating interest in relation to the total APR adjustment; or
   4. (iv) each payment differential set out in the schedule produced in accordance with CONRED 6.4.20R(3) when calculating interest in relation to the adjusted realised cost of credit cap; and
2. (b) compensatory interest rate is the rate that applies for that calendar year as set out in the table in CONRED 6.4.35R.

1. (a) calculated the amount of redress payable to the consumer under CONRED 6.4.4R (the commission repayment remedy) or CONRED 6.4.22R (the hybrid remedy); and
2. (b) where relevant, set-off any undisputed arrears or defaults against that redress amount in accordance with CONRED 6.4.24R.

1. (a) the basis for the lender’s determination that there was an unfair relationship that caused loss or damage;
2. (b) the total amount of redress payable to the consumer as an offer in full and final settlement of all claims against the lender within the subject matter of the scheme relating to the agreement;
3. (c) details of the calculations the lender made under CONRED 6.4.3R to CONRED 6.4.34R to determine the total amount of redress, clearly setting out the methodology used, any evidential assumptions and reconstructions relied on, the amount of compensatory interest included in these calculations and any proposed set-off for undisputed arrears or default sums; and
4. (d) that the consumer has 1 month from the date of the provisional redress decision to respond.

1. (a) acknowledge the response; and
2. (b) explain that the complaint will not be dealt with any further.

1. (a) send an acknowledgment containing the information in CONRED 6 Annex 10.1R within 7 days, requiring the consumer to provide further details of the objection, including any evidence supporting the objection, within 1 month of the date of the acknowledgement;
2. (b) decide whether it should revise the provisional redress decision and recalculate the amount of redress payable based on the consumer’s objection and any supporting evidence; and
3. (c) undertake one of the actions set out in (5) within 2 months of:
   1. (i) the day it receives the further details of the objection; or
   2. (ii) where it receives no further details within 1 month of the date of the acknowledgement in accordance with (a), the date of the expiry of that 1 month period.

1. (a) send a redress determination containing the information in CONRED 6 Annex 3 that confirms:
   1. (i) that the lender has rejected the consumer’s objection; and
   2. (ii) the total amount of redress payable to the consumer in full and final settlement of all claims within the subject matter of the scheme relating to this case; or
2. (b) send a redress determination containing the information in CONRED 6 Annex 3 that confirms:
   1. (i) the lender’s acceptance of the consumer’s objection; and
   2. (ii) the revision of the provisional redress decision and recalculated total amount of redress payable in full and final settlement of all claims within the subject matter of the scheme relating to this case.

(8) Any communication sent by a lender under this rule must be sent in a durable medium.

1. (a) may provide the consumer with the option of offsetting the amount of redress against any outstanding principal instead of receiving it as a separate payment; and
2. (b) must offset the amount of redress against the outstanding principal where the consumer gives consent to do so.

1. (a) if a county court so orders in England and Wales, be recovered by execution issued from the county court (or otherwise) as if it were payable under an order of that court;
2. (b) be enforced in Northern Ireland as a money judgment under the Judgments: Enforcement (Northern Ireland) Order 1981; or
3. (c) be enforced in Scotland by the sheriff, as if it were a judgment or order of the sheriff whether or not the sheriff could themselves have granted such judgment or order.

1. (a) a response to a communication sent to a consumer under this chapter; and
2. (b) a complaint the lender would have been required to consider under CONRED 6.2.17(R)(2) had it been received before the end of the 17-month period referred to in that rule.

1. (a) S = successor’s liability;
2. (b) R = redress payable to a consumer;
3. (c) T = term of the relevant loan represented in days; and
4. (d) D = number of days for which the successor holds the loan.