Student Loans Company Ltd

4. Mr L complains the SLC made misleading information available online about how it calculates interest on unearned income.

5. He also complains the SLC was unable to provide accurate statements about his daughter’s balance or explain how it was calculated due to ‘system errors’ throughout 2021.

6. Also, Mr L complains the SLC’s attitude during the complaints process was unhelpful and dismissive and it refused to engage or accept fault even when proven wrong.

7. He says the poor information resulted in a financial loss to his daughter of £1,646.54. He says he has also spent a great deal of time pursuing this complaint and this, as well as the SLC’s repeated denials it did anything wrong, has caused frustration and distress.

8. He would like an independent third party to check SLC’s calculations to make sure they are accurate, financial compensation equalling the £1,646.54 financial loss, and financial compensation for the poor customer service.

9. Mr L’s daughter’s loans entered repayment in 2016. The SLC took repayments via HMRC following completed self-assessments for income tax, before she made a voluntary payment of £739.86 on 11 January 2021, to clear her remaining debt.

10. She wrote to the SLC that month asking for evidence her loan had now been repaid. On 21 January, the SLC wrote back saying it had not yet received her self-assessment for the 2019/20 tax year and her account showed an outstanding balance of £1,074.51.

11. The SLC wrote again to Mr L’s daughter on 19 April to advise that it had now received her self-assessment for the 2019/20 tax year and it showed a balance of approximately £68.54. It asked her to provide confirmation of her total gross earnings for 2020/21 so that it could give an accurate balance including any interest.

12. After further correspondence, the SLC issued Mr L’s daughter with a refund of £35.33.

13. His daughter rang the SLC on 3 June as she thought a larger refund was due, having repaid her loan in January but still having PAYE deductions taken until May. She advised that her gross income was over £40,000 from employment and a further £15,000 from rental income. The SLC confirmed on the refund and incorrectly advised that student loans only took employment income into account.

14. Mr L rang the SLC later that same day to raise the points his daughter had about why a greater refund was not due. The SLC advised it had to run further checks and asked him to call back the following week. The SLC incorrectly said again that only employment income was taken into account for student loan repayment calculations.

15. Mr L called again on 8 June and explained that his daughter’s online balance now showed credit of £139.33. The SLC explained a variable interest rate had been applied depending on income and that he should wait to see an up-to-date statement.

16. On 15 June, Mr L wrote to the SLC and this was logged as a stage one complaint. The SLC issued its response on 21 June advising:

• it was unsure how Mr L had calculated the total repayment amount from January • it had no record of being asked for a settlement quotation and explained that an online account will only show balance at the receipt of the most recent HMRC repayment • interest is calculated retrospectively based on the information it receives and it did not receive the 2019/20 tax year information until 31 January • after taking account of the refund there was a credit balance of £104.19 • as his daughter was both employed and self-employed, it calculated interest using total income from both PAYE and self-assessment • there would be no student loan liability for his daughter’s self-assessment return from 2020/21 • all things considered, there was a credit of £171 which it says it refunded at that time • it had encountered an issue with the system calculating variable interest for the 2020/21 tax year and could only update it manually. This meant it was unable to issue an updated statement and it could not give a timeframe for a fix.

17. Mr L replied on 22 July. He was unhappy it could not check the 31 December 2020 balance as there had been no statement since June 2020 and a manual adjustment introduced possible human error. He also stated that his daughter had never been self-employed and unearned income should not be taken into account when calculating variable interest. He said the SLC should recalculate the interest rate applied considering this information.

18. Mr L wrote to the SLC that same day to complain about the handling of the complaint.

19. The SLC issued another complaint response on 26 July repeating how it calculated the repayments and the interest.

20. Mr L wrote back the next day advising that the SLC were missing the point of his concerns. He stated that unearned income should have no effect on how variable interest is calculated. He also wrote again to the CEO about the culture of the SLC and the difficulty in getting staff to understand concerns and accept fault. He advised that he believed his daughter was due a refund of about £1,600.

21. The SLC responded on 5 August with relevant regulations showing how it calculates interest. Mr L responded the same day and again on 10 August stating the SLC’s website did not support this argument. He asked for the complaint to be escalated to the IA.

22. The SLC wrote again on 17 August advising it was amending its website to make things clearer for customers who were self-employed and those who needed to complete self-assessment returns.

23. Mr L wrote to the SLC on 27 September asking for an update on his escalated complaint and for the SLC’s progress with the identified system issue.

24. The SLC responded on 8 November advising they had no timescale for resolving the issue but provided printouts of his daughter’s account from its internal finance system.

25. The case reached the IA which completed and issued its report on 4 December. It found that:

• Mr L’s daughter may have been misled by the language on the SLC website at the time as well as incorrect advice from the SLC’s staff. It clarified that all income, earned and unearned, needs to be included in any repayment and interest calculation. It said that Mr L’s contact led to the SLC correcting this information online • though Mr L remains concerned there were errors in finalising his daughter’s account, the IA has not seen any evidence of this. It was concerned there was no timetable to fix the issue and asked the SLC keep Mr L informed of progress • there was no evidence his daughter experienced any measurable financial loss as a result of the errors it had found.

28. Before we decide if we should investigate a complaint in more detail, we look at whether there are signs the organisation got something wrong that had a negative impact on the person. If we think it did, we will go on to consider what, if anything, the organisation has done to try to put things right.

29. The IA agreed with Mr L’s position that the SLC had made inaccurate information available online on variable interest and how the SLC calculated this for loan repayments. It also agreed that Mr L’s daughter had likely been misled by both this information and comments from the SLC staff, saying loans are calculated on employment income only This is incorrect and the regulations are clear that all income, both earned and unearned, should be included.

30. Mr L is unhappy with the IA’s conclusion regarding financial loss. Mr L strongly believes that the misinformation caused a financial loss whereas the IA has found the opposite. He also believes that it fell short by stating his daughter would not have saved a significant amount of money by repaying the loan earlier, had the information on the website been correct.

31. Therefore, we have focussed our consideration on whether there is any evidence of the impact claimed by Mr L of direct financial loss.

Financial loss

32. Mr L says that the SLC’s misleading advice was a significant factor in his daughter’s financial loss as, had it been correct, they would have then chosen to repay the loan earlier.

33. As found in the IA’s report, the SLC’s handling of the matter appears to have been poor and it has accepted it gave incorrect information by its website, in letters to and phone conversations with Mr L’s daughter.

34. The IA’s report does explain that, if the SLC were to recalculate his daughter’s variable interest based solely on her earned income, then that could be financially advantageous to her. However, that is not how the interest should have been applied despite the information available online at the time.

35. Up to that point she had be received accurate statements from the SLC until the end of the 2019/20 tax year that correctly set out the variable interest rates applied to her total income – both earned and unearned. She then chose, with this knowledge to hand, to voluntarily repay the remainder of the loan in January 2021.

36. From the evidence available and having spoken with Mr L, we agree that his daughter may have been financially better off had she chosen to pay her loan off earlier. Where we disagree is that he argues she was entirely unaware, due to the misleading information online, of how the variable interest rates were applied by the SLC. From what we have seen, even with the poor information available online, the statements that his daughter received showed the variable interests and how they were correctly applied to her entire income – not just earned but also unearned.

37. We believe the evidence was available to his daughter on how the SLC applied variable interest rates to student loan repayments. She was, therefore, in a position to make a decision on repaying her loan based on that. She decided to do this in January 2021, not earlier.

38. Equally key to this point is that the SLC website advises any customers who are looking to make voluntary repayments to seek a specific settlement quotation before doing so. This allows the SLC to calculate the exact figure that is outstanding for repayment and for all of the relevant information received to be properly taken into account.

39. Neither Mr L nor his daughter asked for a specific settlement quotation before voluntarily making what was believed to be a final repayment. Any issues that arose after this voluntary repayment could, potentially, have been avoided by requesting a settlement quotation instead of simply making a large voluntary payment.

40. We empathise with the situation Mr L and his daughter have found themselves in and agree that the service offered was not up to the standard expected. We go on to address aspects of that service in more detail later. It does seem that the SLC gave poor advice on its website and by telephone and this lack of a straight answer would only have added to the distress and frustration they experienced. Our decision is not in any way intended to lessen or undermine his or his daughter’s experience.

Statements

41. In its report, the IA agreed with Mr L’s complaint that it was concerning the SLC had been unable to give accurate statements or explain how the statements were calculated. It concluded this was an unsatisfactory service.

42. Mr L complains to us that the £200 offered by the IA was too low considering the time he and his daughter spent pursuing the complaint and the frustration this caused. He also argues this figure would not give the SLC a good enough reason to improve. He also believes it fell short by not fully recognising the significance of the issue with the SLC’s systems.

43. We have focussed our consideration on whether the IA’s offer was appropriate.

44. The IA relies on its experience as well as the Terms of Reference to decide, where it considers appropriate, a compensation figure. The Terms of Reference state that the IA can recommend an ex-gratia sum of up to £5,000 for any documented loss or expense or up to £500 for ‘an unreasonable degree of inconvenience suffered’.

45. We agree that, from the evidence available, it is likely Mr L spent a good deal of time pursuing this complaint. This time would likely have only added to the frustration caused by the events. The main cause of this part of the complaint was the SLC’s repeated failure to give accurate statements or to properly explain how it calculated his daughter’s balance.

46. The IA felt the frustration, distress, and overall poor service provided by the SLC deserved £200. This was consistent with other offers of similar instances and was in line with the Terms of Reference, as it falls into category for offers up to £500. The IA also recommended that the SLC keep Mr L updated on its efforts to resolve the system issues that had prevented it from being able to share automated calculations.

47. Having reviewed the time Mr L and his daughter spent pursuing the complaint as well as the frustration this would have caused, against the IA’s findings and eventual decision, it appears it took all of these into account when calculating this figure. We have not seen anything to suggest that the IA should have made a higher financial recommendation. Situations where we may consider it should have gone beyond this figure would be, for example, where a more serious impact happened over a longer period of time. Therefore, we believe the amount to be in line with the Terms of Reference and reasonable to put right the worry and distress as well as the time spent pursuing the matter.

48. The SLC said it was already looking into resolving it system issues, stopping it from being able to send accurate calculations. The IA fairly recommended it keep Mr L informed of the progress in fixing this.

49. We realise Mr L is concerned the IA’s financial recommendation is not enough ‘incentive’ for the SLC to improve its service. We empathise with the situation Mr L went through and appreciate his desire for the SLC to improve itself. It is important to note, however, that the financial offer was intended to try to put things right for him and his daughter and not to punish the SLC.

Complaint handling

50. Our principles set out how we expect organisations to handle complaints. To be open and accountable, we expect organisations to give clear evidence-based explanations and reasons for its decisions. We also expect that where things have gone wrong, they should fully explain how this happened and say what they will do to put matters right as quickly as possible and to behave helpfully.

51. To seek continuous improvement, we expect organisations to learn from complaints, particularly where that complaint has highlighted problems, and they should state any changes they have made to prevent that problem happening again.

52. In Mr L’s case, he is unhappy with what he argues was the SLC’s ‘unhelpful and dismissive’ attitude during the complaints process and how it refused to engage or accept fault even when proven wrong.

53. The complaints process began on 15 June 2021. From that point, the SLC wrote to Mr L on 21 July, 26 July, and 5 August. It did not uphold his concerns and explained it did not believe it had done anything wrong. After the 5 August response, Mr L wrote the same day and again on 10 August outlining that the information SLC had provided throughout the complaints process was different to what was available to the public online and what they had been told since January. At that point, the SLC accepted it had been unclear and advised it was changing its website to make it clearer how it applies variable interest.

54. After this, the only correspondence between the SLC and Mr L was about him going to the IA.

55. Given the clear recorded contact over a period of two months between 15 June and 17 August, we cannot say the SLC refused to engage in the complaints process. The evidence we have seen shows it was involved in the process and correspondence was regularly and, often quickly, responded to.

56. Equally, we have seen nothing to suggest the SLC’s actions were unhelpful or dismissive, however we can see how that could have come across. As we have already seen, from a service perspective the SLC clearly fell short. The SLC seems to have dealt with the complaint without realising the error it had repeatedly made on the case.

57. This meant that though the information it provided Mr L with in its 21 July, 26 July, and 5 August contact was correct, it confused things because of the inaccurate information on the website, and its previous poor advice given by telephone. The correspondence up to this point was understandably seen as dismissive as, though the information it was now giving was accurate, the SLC did not realise it had given wrong information before.

58. When Mr L pointed this out, the SLC accepted the confusion caused and advised it was looking to make changes to stop this from happening again in the future. This shows a clear acceptance of fault at the time it realised it had been wrong.

59. It appears the SLC’s handling of the complaint was broadly in line with our principles. We can see it gave a clear evidence-based explanation for its actions three times during the complaints process. Once Mr L pointed out the confusion caused by the website and its previous advice, it acted quickly to make changes and wrote to explain what it had done.

60. We appreciate the overall service provided by the SLC has been, as it and the IA have already stated, below the expected standard. However, we cannot say this poor service continued to its complaint handling. That is not to take away from Mr L’s clear frustration at the situation. We hope it does, however, explain what happened.

1. We have carefully considered Mr L’s complaint about The Student Loans Company (the SLC). We can see that aspects of its service fell short as it had unclear information on its website and it was unable to provide timely, accurate statements. The Independent Assessor (the IA) has already fairly recommended the SLC pay Mr L £200 in recognition of the frustration and distress experienced as a result of the poor service.

2. For the reasons we shall go on to explain, we do not consider that his daughter was financially disadvantaged by this. Although at first the SLC’s complaint handling was confused, once it realised what the problem was it acted quickly to resolve it.

3. Overall, we believe it handled the complaint reasonably well, although we realise the time it took to get it right was frustrating for Mr L.