Questions of cash: Is the bank or my wife in the wrong?
Saturday 26 March 2005
Q. Five years ago, I had a joint current account with my wife at Lloyds TSB. It was not used by my wife and I was the only person contributing to it.
Q. Five years ago, I had a joint current account with my wife at Lloyds TSB. It was not used by my wife and I was the only person contributing to it. In February 2000 I was told by the bank that I could not withdraw any money from the account, as there were no funds in it, even though it should have held more than £2,000. Some £1,800 had been taken from the account by Lloyds TSB to settle credit card debts accumulated by my wife without my knowledge. Was the bank within its rights to do this?
AB, by e-mail
A. The money was not transferred to clear a credit card debt, but to partially repay two loans taken out by your former wife, which she had apparently not told you about. One was a personal loan and the other a graduate personal loan, but both were in her sole name.
Lloyds TSB says that it obtained "appropriate authorisation" to make this transfer, pointing out that either party in a joint account can make such an authorisation. If, as it appears, your ex-wife authorised the transfer without telling you, it seems that it is your she - not the bank - who was in the wrong.
Even so, you can ask the independent Financial Ombudsman Service to review the case. But if you have a serious problem again, it would be wise not to wait five years before trying to resolve it.
Q. I recently paid in a large cheque at a high street bank. I was taken aback when the cashier asked where the money had come from. She said she had to ask in order to comply with money-laundering regulations. Is this true? Should I be upset?
A. Whether or not you get upset is up to you - but if so your irritation should be directed not at the bank or its cashier, but at the Government and the European Union, or perhaps the criminals whose activities have led to these regulations.
Under current laws, it is quite correct that large deposits that are not typical for a particular customer should be investigated by a bank to comply with the Money Laundering Regulations 2003.
Q. Is it legal to deduct money from a credit card when the goods being bought are not yet available for dispatch?
A. Yes, unless your contract with the trader specifies immediate dispatch. Peter Ashford, a lawyer with the solicitors Cripps, Harries, Hall, says: "It depends on the terms on which you agree to buy something. Some traders expressly say they won't debit until they dispatch the goods. [Otherwise] the risk is that you pay before you get the goods, or perhaps the goods never arrive."
Ashford suggests taking this precaution when buying goods over the internet, phone or by mail order: do business only with traders who promise not to process the payment until the goods are dispatched.
It is also preferable to use a credit card rather than a debit card for payment, as, under the Consumer Credit Act 1974, the bank issuing the credit card bears responsibility for a UK transaction if the trader fails to provide goods or services as ordered.
Q. I am a divorced woman of 59, and am expecting a pension from the local government superannuation scheme when I turn 60 of £7,000 a year, plus £20,000 tax-free cash. I will receive a basic state pension of £4,140 a year, towards a total expected income of £11,140, compared with my current income of £28,000 a year as a social worker. While I would like to retire and travel, and my work environment is stressful, I don't see how I can afford to do so. I have equity of £160,000 in my home. Is there any alternative to working part-time?
CM, by e-mail
A. Phil McGovern, of the independent financial adviser MPA Pension & Investments, says: "You should first confirm how much basic state pension you will get by completing form BR19, available from the Department of Work and Pensions. If you have a shortfall, you can claim on your ex-husband's National Insurance credit history to top it up. This is called state scheme substitution and has to be claimed from the DWP. Your ex-husband does not lose anything, but you lose the extra benefit if you remarry.
You might also consider using your £20,000 lump sum to invest in two lots of £7,000 in ISAs over two different tax years. These could be invested in income-producing ISAs, generating an income of about 5 per cent a year - £700 - tax free.
"You will still have £6,000, which should be invested in a deposit account in a building society for emergencies, holidays and similar. But first pay off any high-interest borrowings, such as credit cards."
McGovern suggests that it is uneconomic to consider an equity release scheme at your age. "For someone aged 60, Northern Rock, for instance, will only release 20 per cent of the property's value." Equity release tends to be more suitable when a person is in their seventies, when the value released rises above 30 per cent.
* If you have any queries, write to: Questions of Cash, The Independent, 191 Marsh Wall, London E14 9RS, or e-mail: firstname.lastname@example.org. Please send copies, not originals.
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