The Sunday Times Business & Money - UK (2021-11-14)

MONEY

Why is it so

hard to tell if

your holiday

is covered?

reflect this huge repayment. Even then,

this would not have been a disaster had

your solicitor picked up the discrepancy

— but you had not told him that you were

repaying a large chunk to reduce the

early redemption penalty.

On completion day your solicitor paid

Barclays the full amount he believed to

be still outstanding on the mortgage -—

£268,522.95, which included the full

early redemption penalty of £7,889.

You said: “With hindsight, it could

have been good to give my solicitor the

heads-up about the early redemption,

but from all the reassurances from

Barclays about the money clearing in

time, I did not expect this.”

Two weeks later Barclays returned the

CAN WE HELP YOU?

Please email your questions to Jill

Insley at questionofmoney@sunday-

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Bridge Street, London SE1 9GF.

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reply to everyone who contacts her.

QUESTION

OF MONEY

JILL INSLEY

W

e plan to go to the

Canary Islands in

March for a golf trip.

The golf and hotel

element has to be

booked separately

from the flights with

Jet2.com.

The airline will

refund the cost of the

flights if Spain, like Morocco, decides to

ban flights from the UK. But when

I rang UK Insurance, which provides

travel insurance for our building society,

Nationwide, to ask if we are covered for

the hotel and golf costs, the lady I spoke

to kept referring to the policy document

I had already read. She said if Foreign

Office advice is not to travel then we

are covered.

This seems contrary to suggestions

that Nationwide is a top-rated provider

of comprehensive Covid cover.

Jill replies

I understand your concern about the

reference to Foreign Office advice — it

often seems to regard travel as possible

long after normal travellers would give

up on the idea for safety’s sake.

UK Insurance is part of the Direct Line

Group, the UK’s third biggest insurer,

and it is important that the wording of its

policies should be clear and understood

by all. I asked UK Insurance to clarify

whether you would be covered if you

booked and paid for the holiday now,

while it is possible to travel to Spain,

but were denied entry at the time of the

holiday by the Spanish government.

It said: “This would be covered under

the natural disaster section of the travel

policy. If a person is unable to access

their pre-booked accommodation due

to a pandemic this is a covered event,

subject to costs not being recoverable

from elsewhere and that this wasn’t the

position when the trip was booked.”

Since we are in a pandemic now, and

presumably still will be in March, I asked

again whether you specifically would be

able to claim if Spain decided to reject all

planes flying from the UK because we

were riddled with Covid, regardless of

what the Foreign Office said. It said yes.

I paid off my mortgage

twice by mistake

I was completing the sale of my property

for £425,000 on September 29. Initially

I thought I faced an early redemption

penalty of nearly £8,000 on my

£260,293 mortgage with Barclays, but

because I was within 90 days of the

redemption date I was able to pay 90 per

cent, or £234,263 of the balance within

this time and incur a penalty on only

10 per cent. I raised the money by

borrowing from family.

I called Barclays on September 17 to

clarify this and was assured that the

£234,263 would clear in plenty of time

and be added to my mortgage account if

I paid it in by the end of the next week.

I made the transfer on September 21,

eight days before the completion date

and seemingly in plenty of time.

However, on the completion date I

noticed that only £150,544 had been

transferred to me by my solicitor. I was

short to the tune of £242,000 because

Barclays had not processed the

£234,263 payment and my solicitor had

therefore, unknowingly, paid the full

value of the mortgage off plus the

£8,000 redemption penalty.

What’s more, at the start of October

Barclays took the full monthly mortgage

payment from my bank account, despite

the mortgage being fully paid off.

After many phone calls and emails,

threatening Barclays on Twitter, raising

a formal complaint and giving the bank

a deadline of October 18, I finally got a

repayment, but it was £8,000 short.

I have not received any apology or

acknowledgement of the error from

Barclays. So far only a letter dated

October 4 has arrived, acknowledging

receipt of my transfer of £234,263,

exactly two weeks after the date of the

transfer but with no acknowledgement

of the redemption of the mortgage five

days earlier and quoting a new monthly

payment of £39.69.

Given all the stress and time invested

in resolving this situation, I think that

Barclays should waive the remaining

redemption penalty of £490 and pay

interest on the money of mine that it has

been holding on to for the past three

weeks, as well as repaying the extra

monthly mortgage payment that was

taken. This has been stressful for me and

my family, and it has not been easy to

sleep or concentrate on our jobs. I hope

the matter can be resolved quickly.

Jill replies

When I asked Barclays to explain what

had happened, it confirmed that you

had made the £234,263 payment on

September 21. This was received on the

23rd, but only cleared into your account

on October 3. The redemption statement

for your mortgage was sent to your

solicitor on September 24, so did not

written, several times, but all I get back

are vague and somewhat inconsistent

statements with no breakdown of how

the amounts have been calculated.

My pension fund is worth £114,137.28,

and I intend to take £28,534.32 as a

tax-free lump sum. The remaining

£85,602.96 should attract a guaranteed

annuity rate of 9.1 per cent, producing

an annual amount of £7,789.87 or gross

monthly income of £649.15. Aviva is

offering £6,289 or £532.28 a month.

I do not understand the relevance

of the “stakeholder legislation”. My

original policy was based on opting out

of Serps — the previous incarnation of

the state pension — and it should in my

view not be relevant to this policy. I have

never paid any direct contributions.

Would it be possible for you to take this

up? I seem to be getting nowhere.

Jill replies

Your pension has had many

incarnations, starting with Equity & Law,

then becoming part of Friends Life and

finally Aviva. It was originally split

between managed and with-profits

funds, but in 2017 you complained to

the Financial Ombudsman Service

when Friends Life refused to let you

switch the money in its managed fund to

its with-profits fund.

As you have pointed out, pension

investments in the with-profits fund

came with a very attractive guaranteed

annuity rate, which would entitle you to

a much bigger income than the low

annuity rates available today. The

ombudsman ruled in your favour and all

your pension was moved to with-profits,

so you expected to benefit from the

guaranteed rate on the full £114,137.

However, your Serps rebates were

received as single premium payments

once a year, and Aviva says each rebate

was subject to its own set of charges,

features and benefits. In 2001 the

government brought in new

“stakeholder” regulations to reduce

the amount pension companies could

charge investors. These changes meant

that from 2002, charges for your

pension were lower and more of your

rebate was invested for your benefit. To

mitigate some of the ensuing reduction

in charges, the insurer withdrew the

offer of a guaranteed annuity rate for

any new money being invested in the

with-profits fund.

Aviva says Equity & Law would have

informed your financial adviser about

these changes at the time, who in turn

should have told you. But you moved

jobs in March 2001 and were without

a financial adviser until 2007.

Aviva says the money that you

invested in with-profits up to and

including 2002 still benefits from the

guaranteed annuity rate, but any

subsequent investments, including

the money you switched over in 2017,

do not.

It has offered you £100 compensation

for being slow to respond to your

queries, but I’m afraid this won’t result

in a bigger monthly pension.

ON

EY

LEY

£234,263 you had paid off the mortgage

twice, plus the October payment for

£399 that had been incorrectly collected

from you and an end-of-mortgage interest

adjustment of £141.71. But it failed to

repay the early redemption penalty paid

mistakenly by your solicitor.

You were still due to pay a partial

early redemption charge of £490, but

because the bank has been slow in

returning the rest, it has offered to

waive the full penalty and to pay you

£300 in compensation for the delays.

You are not convinced that Barclays

has returned the £399 excess mortgage

payment, but have agreed to accept a

payment of £8,108 for the time being.

I’d like my pension, but

Aviva has other ideas

I am hoping that you may be able to help

me with a frustrating time I am having

with Aviva over my defined contribution

pension. I am looking to take the

benefits now, following my 64th

birthday last week. The policy, moved

from Friends Life to Aviva in 2017, is a

“with-profits” scheme that attracts

a guaranteed annuity rate (GAR).

However, when Aviva issued my final

quote of what pension income I could

expect, it advised that the GAR applied

only to part of the fund because of

“stakeholder regulations in 2001”, even

though the policy was taken out in 1988.

I have tried talking to Aviva about this,

but it says the matter has been referred

to a non-“customer facing” team. I have