Questions Of Cash: Do all banks offer investor protection?
Saturday 19 January 2008
Q. I thought that, following the Northern Rock affair, there was now full investor-protection up to £35,000 under the Financial Services Compensation Scheme (FSCS), and 90 per cent protection for larger amounts. But I have looked at the ICICI Bank website. There it says that only the first £2,000 is protected in full, and thereafter 90 per cent of the next £33,000. Can you help me understand the situation? TP, by e-mail.
A. Since October last year, should a bank fail, the FSCS will meet in full the first £35,000 of any loss – but nothing above this. The protection levels you quote as being specified by ICICI are those that prevailed before October last year. ICICI Bank is regulated by the FSA and is therefore subject to FSCS protection and when we checked its website it correctly reported the protection that now applies. In the special case of Northern Rock, the full value of all deposits has been guaranteed by the Government "for as long as the current period of financial market instability lasts". The Chancellor is currently reviewing depositors' protection arrangements for all UK banks and building societies.
Q. I loaned a friend of mine £3,000 15 years ago. Eventually, a few months ago, I got the money back from him. But soon after, my friend went to a Citizens' Advice Bureaux about his many debts and on their advice declared himself bankrupt. I have now been told I must repay the money my friend gave me. My friend had not intended to make himself bankrupt at the time the money was repaid to me. What can I do? AN, by e-mail.
A. You should be able to retain the money if you can legitimately claim that you demanded the money from your friend, also pointing out that, as you state, you were unaware of the possibility of him becoming bankrupt. You need to demonstrate that you were not given a "preference" in the treatment of your debt in the run-up to the bankruptcy. Philip Long, head of corporate recovery at accountants PKF, explains: "A preference in bankruptcy occurs where the individual does anything which has the effect of putting the friend into a position which is better than the position he would have been in if that thing had not been done – see Section 340 of the Insolvency Act 1986. The trustee in bankruptcy must show that the bankrupt had a 'desire to achieve' the preference unless the friend is an 'associate' – basically a relative – in which case, the preference is assumed to have taken place. The usual defence for the friend would be that it was he that demanded the money back from the individual, and that he was unaware of the financial desperation of the impending bankrupt."
Q. I purchased a Nikon digital camera through Amazon in September 2006 for £188.40. I returned this immediately to the seller (not Amazon) by special delivery, paying £7.40. I repeatedly e-mailed the seller requesting a refund, but got no reply. I then e-mailed Amazon, which also did not reply. Eventually I contacted the Post Office, which said the item was waiting in its sorting office to be delivered, but that the seller would not take re-delivery. SS, by e-mail.
A. Our repeated attempts to get resolution – or even any sort of answer – from Amazon got nowhere. Luckily for you, Royal Mail has now lost the package and has agreed to refund you in full.
Q. In February last year, £703.11 was taken from my Alliance & Leicester account, and a week later it was credited back to me. In August, the bank told me it was reviewing my overdraft facility, but I had by then closed my account and told A&L this – but it claimed I owed £700. I have requested bank statements to see how it arrives at this figure, but it wants to charge me over £4 a time to provide the information. GS, Edinburgh.
A. The sequence of events is, says A&L, "complex", and the explanation you sent us was sketchy. According to A&L, you appear to have confused activity across two credit card accounts and your current account. A&L's records show that your current account was in credit by £168 until payments of £267 and £604 were made to your two credit card accounts, producing an overdraft of £703. A&L says that you have since explained that you expected a credit to be made into this account from another bank which would clear this amount, but that this credit did not materialise. In all, you were charged £75.17 for having gone overdrawn, which A&L says represents correctly applied charges. However, because of the confusion and because you have agreed to clear the substantive balance, A&L is writing off these charges and administrative costs of £8.
Q. I became fed-up with the service with British Gas and in April last year told BG I was transferring to a different supplier and it should cancel my direct debit from May. My final gas bill showed a balance due of £35.48, a payment of £28.50 was taken in May by direct debit, leaving me owing £6.98. But BG has demanded the £35.48, sending threatening letters and demands from a debt-recovery firm, despite my repeated letters explaining I did not owe the money. BG has offered to reduce the bill to £24.84, but I only owe £6.98. TC, Wallingford.
A. BG says that the final bill of £35.48 had already taken into account the direct debit about to processed: consequently the amount due was the full £35.48 shown on that bill. However, BG accepts it did not properly explain this to you and as a gesture of goodwill has written-off the £35.48. The debt-recovery agents have been informed.
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