Questions of Cash: Did the bank have a right to my money?
Q. In 1994 I was forced to close my tourism business, leaving a Royal Bank of Scotland overdraft outstanding.
Q. In 1994 I was forced to close my tourism business, leaving a Royal Bank of Scotland overdraft outstanding. The overdraft was not secured on my home. The Matrimonial Homes (Family Protection) (Scotland) Act 1981 says the wife is joint owner of the family home; yet the proceeds of the sale of the house were recovered from my lawyer by the bank. My wife was not part owner of the business and not party to the overdraft. We insist the bank's action was unfair, but the bank refuses to accept it is in the wrong.
A. There is a fundamental disagreement between yourself and RBS regarding the facts of the case. RBS insists that the papers you have sent us do not prove that your wife part-owned the house. It says the fact that the mortgage was only in your name proves that she did not part-own the property. Lawyers of the bank say you misunderstand the meaning of the Matrimonial Homes Act, which does not provide for automatic joint ownership of the family home. It also states that you sold the home in order to repay the overdraft, avoiding bankruptcy, and that your lawyer acted in accordance with your instructions.
RBS points out that it has written off £24,000 of your debt in recognition of the hardship caused to you and the efforts you made to repay the overdraft. Your claim is outside the scope of the Financial Ombudsman Service as it is above its £100,000 limit. You are now out of time to lodge legal action against RBS. There appears to be no action you can take against RBS, nor have you proved that the bank is in the wrong. We note that you have initiated action against your former solicitor, alleging that his negligence caused you to fail to meet the courts' time limits. If you are unsuccessful, all we can suggest is that you try to get on with rebuilding your lives. Failing in business can be an extremely damaging event.
Q. I am 30. I started a personal pension plan with Norwich Union six years ago. The plan is roughly in line with NU's projected growth for the policy. According to that table of projected growth it is only after 10 years that my fund takes off in relation to deductions, and so I intend to keep my contributions to their minimum for the next four years and then substantially increase them: my theory is that by doing so I will have negated the effect of the up-front charges. Am I correct?
A. Pensions adviser Carl Melvin of Pension Transfer Solutions strongly disagrees with your approach. "Charges are important, but investment performance is more important," he argues. The most important factor in building up your pension pot is the result of compound interest, which means the early money does the hardest work. He suggests you investigate whether you can transfer on a "bid to bid" basis your existing fund into the NU stakeholder plan, which would cap charges at 1 per cent annually. If this would attract a transfer penalty you could redirect your contributions to the stakeholder pension of your choice. Mr Melvin suggests you increase your investment and review your provision with a pensions specialist IFA.
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