Questions of Cash: Holiday had to be abandoned thanks to bank mess

Q. My family all bank with Ulster Bank and we have had terrible difficulties getting hold of our own money. My brother has been unable to go on his pre-booked holiday – costing him the price of the flights and hotel and wasting his annual leave. What compensation can we expect from Ulster Bank and what are we entitled to? SB, Belfast.

A. Large numbers of customers of Royal Bank of Scotland, NatWest and Ulster Bank suffered as a result of the catastrophic failure of the banks' IT systems. Problems were sorted more quickly at the parent bank's system than at Ulster Bank for complex technical reasons. By the time Ulster Bank has fully resolved the crisis, some customers will have had difficulty in accessing their accounts for a month – leading to missed mortgage payments and serious problems for account holders in withdrawing their own money. This has caused particular difficulties for customers abroad, some of whom are reported to have been unable to pay their hotel bills.

But it is unclear what compensation will be paid by RBS, NatWest and Ulster Bank. Asked about compensation arrangements, a spokeswoman for Ulster Bank said: "We are reviewing it. We have not announced any details. Anyone who has paid fees or charges [because of the IT crisis] will be refunded." However, the knock-on effects of the crisis go far beyond this, with holidays lost and some customers perhaps resorting to high-cost payday lenders. Ulster Bank has apparently not yet decided how to address claims for losses and costs such as these.

The Financial Ombudsman Service says it is essential that banks' customers fully itemise all related expenses, keeping receipts. FOS has had some enquiries from consumers asking for advice, but has not yet received any formal complaints against the banks. Normally the approach adopted by FOS is to put customers back into the position they were in before the loss of service. On this occasion – because of the scale of the problem – that would leave many customers dissatisfied. FOS says that in the past where there have been similar failings – although never on this scale – banks have come up with their own compensation arrangements that have satisfied customers, usually without FOS needing to be involved.

But, as a FOS spokeswoman explains: "There are some very complex situations coming out here", in particular with regard to Ulster Bank. FOS adds that if customers do end up taking their grievances to the Ombudsman, it does have the power to require banks to pay for distress and inconvenience, including for consequential loss. However, it warns, the size of these compensation payments "are generally quite modest". In the past, compensation for distress and inconvenience has usually been less than £300 and is seldom above £1,000. It also remains clear what will happen where the consequential loss has been borne by someone who is not an Ulster Bank customer and who does not have a direct legal relationship with the bank – such as an employee of a company whose salary was not paid and who might, for example, have been unable to go on a booked holiday.

We suggest you claim for all direct and indirect costs and argue your case as strongly as possible.

Q. A colleague and I own a property for rental and in late 2007 engaged the services of a company called the Letting Shop to advertise for tenants. They did this and drew up the necessary agreement. Our tenants moved in during December 2007. When the tenants moved in we asked the Letting Shop to retain the £495 bond they had collected from the tenants. We had no further business with the company and managed the property ourselves.

We later received a letter from a company called Ringwood Lettings Ltd, advising us that, as of 1 October 2008, it was taking over the business of the Letting Shop.

No reference was made in the letter to our property, nor to our tenants' deposit. Our tenants moved out at the end of last year and required the return of their deposit.

When I tried to contact Ringwood, I discovered they had ceased trading. I looked at the Companies House website and found that the Letting Shop and Ringwood shared the same registration number and that the company had been dissolved and struck off the register in November 2010. No accounts had been filed. In the circumstances, we decided to repay the deposit ourselves, so that our tenants wouldn't have to suffer unfairly. It seems that our tenants' deposits were not safeguarded, as required by law. Is there anything we can do to recover the money? CM, Cheshire.

A. We were unable to find a trading or dissolved company registered under the names Ringwood Lettings Ltd or Letting Shop. We are aware of other businesses using the Letting Shop name, which are unconnected to the business you have complained against.

Any residential property let as an assured shorthold tenancy – which yours, presumably, was – must have the tenants' deposit protected in a government-approved scheme. There are three approved deposit protection schemes in England and Wales – the Deposit Protection Service, MyDeposits and the Tenancy Deposit Scheme.

Your letting agent should have placed the tenants' deposit in an approved scheme – but our research suggests that it did not. A spokesman for the Tenancy Deposit Scheme says that you were correct in repaying the deposit as in circumstances such as yours it is the landlord rather than the agent that is ultimately liable to make the repayment.

Given that the company has been dissolved, it is difficult to see how you can recover your money. You may, though, want to consider the question of whether there was any breach of criminal law in the way the company operated and was closed. We suggest you discuss this in the first instance with your trading standards officers.

The Tenancy Deposit Scheme suggests that in future you ensure that you use a lettings agency that belongs to an approved professional body and whose deposits are fully insured.

Questions of Cash cannot give individual advice. But if you have a financial dilemma, we'll do our best to help. Please email us at: questionsofcash@independent.co.uk