ER writes: My wife and I returned home from a month’s holiday in France to find a letter from Lloyds TSB saying it had noted our change of address. We have not moved. It seemed the bank had changed our address to that of our son, and gave him internet access to our two bank accounts. Our home insurance (again with Lloyds TSB) was also changed to his address. Many telephone calls later, I’m still none the wiser as to what is happening and have no idea whether my house is insured.
As you point out, had you been on bad terms with your son, he could have emptied your bank accounts while you were away. Thankfully you get on well, but the changeover was worrying for all of you.
Lloyds did try to put things right after a fortnight, but succeeded only in changing one account back to the correct address; the insurance policy remained unchanged.
However, by now both accounts have been changed back, the insurance has been amended for your address, and you should have received the bank statements you requested with the right address on them once again.
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Lloyds is sending you a letter of apology and £100. It is also writing to your son, apologising and sending him a further £50. You have an unusual surname and your son shares your first name, which partly explains the mix-up. But it does not, of course, explain the delays involved in putting it right.
Taxman wants share of mis-selling payout
GC writes: I have received compensation for a mis-sold endowment mortgage from the financial ombudsman and have been told it is subject to tax. You had earlier written that such payments are not taxable. Who is right?
It is, in fact, a maddening grey area, and I think the Inland Revenue needs to get together with the ombudsman to clarify the situation once and for all.
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Compensation for the earliest cases of endowment mortgage mis-selling was calculated as the return of all premiums paid plus interest. Now compensation is calculated as if the investor had taken out a repayment mortgage from the start. The aim of both calculations is the same: to put the complainant back in the position he or she would have been in if there had been no mis-sale.
In the second case, interest does not technically form part of the calculation. The compensation is merely a matter of redress, on which it appears generally agreed that no tax should be payable. But in the former case interest does figure in the calculation, and a number of readers have since written in to complain that they, too, have had to pay tax.
A spokesman for the Financial Ombudsman Service (FOS) said: “Ultimately, it is a matter between the Inland Revenue and the consumer. Our view is that our awards are awards of damage, however calculated, and therefore not taxable, but we can’t decide Revenue policy.”
I suspect that the FOS is wary of bringing up the subject with the Revenue because of the can of worms it might open. The FOS handled 98,000 cases last year, and the service is, frankly, close to breaking point. It would be practically impossible for the FOS to tell the Revenue which awards used the notion of interest in the compensation calculation. But it is time all this was brought out into the open.
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Why was my cheque returned unpaid?
JR writes: Last year I opened a current account with Alliance & Leicester (A&L), but did not start using it regularly. However, last month I wrote a cheque on this account for £5 to my credit-card company, for which funds were available. But A&L returned it, unpaid. It said: “When an account has not been used for a long time, we will suspend it.” As a result, the credit-card company has charged me a £25 fee for a returned cheque and another £25 for late payment.
A&L says your recollection of when you opened the account is somewhat adrift from reality. It insists you had not used the account since August 2001. However, you should have received a letter from the bank advising you that it was preparing to make the account dormant, followed by a second letter confirming this some weeks later. You never got these letters and, in recognition of this, A&L is refunding you the £50 in charges you incurred. It is also sending you a further £50 as a goodwill gesture, together with a letter of apology. You say you were also made upset and angry by a “very rude girl” at the bank’s call centre, and A&L assures me it will investigate your allegation.
E-mail Diana Wright at questionofmoney@sunday-times.co.uk or write to A Question of Money, The Sunday Times, 1 Pennington Street, London E98 1ST, giving a daytime telephone number. We cannot send personal replies or deal with every letter. Please do not send original documents or SAEs. Advice is offered without legal responsibility