Consumer Rights: The job's at risk but the debt is going nowhere
Sunday 10 August 2008
Q. My husband's company has started a 90-day consultation period for possible redundancy. We have a mortgage and, based on a valuation last year, £32,000 equity in our house. Our loan is insured for redundancy, but we have £28,000 of unsecured debt in loans and credit cards.
We have seen a financial adviser, who told us to remortgage. But with redundancy looming, this is likely to be difficult. What is the best solution? JH, Staffordshire
A. The difficult economic climate is likely to bring more cases like yours to the fore. Banks made borrowing extremely easy and sometimes took little account of people's ability to meet their debts. Now, with redundancies looming, repayment problems are becoming a real possibility.
Alex MacDermott from the Citizens Advice Bureau offers the following advice: "Check if your husband has PPI [payment protection insurance] for any of the non-mortgage debt, which could pay out if he is made redundant. Also seek advice about benefits he could claim if he loses his job.
"Then work out what you would have coming in and going out as a couple if he is made redundant and what if anything the PPI policy on the mortgage will pay out. With all this in place, approach the creditors with an affordable offer."
You are right to think that remortgaging may be difficult. A high loan to value on your property, outstanding debts and no job will make it either impossible or prohibitively expensive. Mr MacDermott also points out that you would not be able to get PPI again. It may be best to exhaust all other options first.
Q. We are having some difficulties with a cash individual savings account ( ISA) transfer from Cheltenham & Gloucester (C&G) to Nationwide building society. We originally applied to open a fixed- rate cash ISA in April 2008, in person at a branch of Nationwide. Since then we have had to resubmit our application four times as the forms have been lost.
To date we have complained and received nothing except a standard response letter. All correspondence seems to have been ignored by both groups.
It has also proved impossible to talk to C&G's customer services department on the phone. JS, Northampton
A. Yours has been a common problem this summer, with many ISA applicants finding that funds leaving their old accounts have taken a long time to turn up in their new ones. Nationwide admits that high volumes have led to delays in processing ISA transactions, and it took the society nearly two months to request the money from C&G.
For its part, C&G then took another three weeks to send the funds across.
Under HM Revenue & Customs guidelines. the whole switching process is meant to take a maximum of 30 days, so these delays demonstrate shabby administration.
When prompted, Nationwide got itself together quickly and gave the following response to your query: "The ISA is due to be opened tomorrow and the new account details should be received in the next few days. It is Nationwide's policy to backdate ISA transfers to the date on the cheque issued by the old provider, and therefore there will not be any financial disadvantage from the delay. We apologise for the inconvenience caused by the delays in the transfer process. As a gesture of goodwill, we will be sending £50 for the stress and inconvenience caused."
In the circumstances, this seems a fair resolution.
Q. I held £43,000 in a post office instant access savings account. Ten days before I was due to complete on a house, I called the helpline to see when I could transfer the cash. However, I was told that the Post Office does not transfer via Chaps (the electronic bank-bank payment system) and I would have to write in to make the switch.
I did this immediately and sent the letter registered mail. Five days later, the cash had still not been switched.
I called up and was told that because it was a new nominated account, there was a five-day "hold" on any transactions – "in the small print", apparently.
This was complicated by the fact that I had lost my security number. I requested that a new one be sent, but a week later this had still not arrived,
Although this was inefficiency on the part of the Post Office, I keep being told I can do nothing to resolve my case without this number. We will now incur considerable costs finding the money from another source for completion on the house. TM, London
A. You have learnt the hard way that "instant access" is very rarely instant. The Post Office describes the access for the product as "unbeatable" in its marketing literature, but most high-street banks offer better access, not least because they use the Chaps system.
This case also highlights the complexity of many of these accounts. Customers are expected to read pages and pages of small print, much of which can be important, as you have found.
Brendan Kearns, senior manager of savings at Post Office Financial Services, says: "With the danger of online banking fraud, the procedures described are absolutely necessary to ensure the security of funds. The requirement that requests for transfers over £15,000 are made in writing adds an extra layer of protection. We use the security number to ensure we are dealing with the correct account holder, and we cannot proceed if the person contacting us does not have it.
"The five-day freeze allows us to write to the customer, alerting them to the request and giving them the chance to check the new account details are correct."
Fraud procedures are necessary, of course, but the Post Office did not keep you well-informed and many banks have developed more flexible ways of operating.
The money is supposedly on its way, but if it still to materialise, I would suggest calling the Financial Ombudsman Service on 0845 080 1800 to register a complaint.
Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk
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