While several building societies have been hit by crisis, the City of Derry Building Society insists it is safe and “comfortably in excess of the statutory minimum” of capital reserves. The society is not merely the smallest in Northern Ireland, it is the second smallest in the whole of the UK.

In recent weeks, six building societies have been rescued - mostly because they loaned too much on commercial properties and for buy-to-let. But the City of Derry society has made no commercial property lending for five years, avoiding the property price bubble. Repayments on its buy-to-let mortgage lending – representing about 20% of all its loans – are performing better than average.

The society also has no borrowings at all from the wholesale market, excessive use of which destroyed Northern Rock. It funds all its mortgage lending from its savings accounts.

Colin Jeffrey, chief executive of the society, admits that the recession has caused problems. “Our arrears are nothing to boast about,” he concedes. But with provisions for bad debts in the society’s accounts at a mere £16,351 on a total loan book in excess of £28m, neither are they are a particular worry. Only 20 loans are regarded as being of concern.

Jeffrey is more worried about his society’s share of the costs of bailing-out financial institutions that went to the wall. City of Derry paid over £37,000 for last year towards the Financial Services Compensation Scheme, which guarantees savings in UK banks and building societies.

For a small society with just one branch – in Derry’s Carlisle Road – and an operating profit for last year of £170,851, this is a significant burden.

“Our profits were down 15% from what we targeted, mostly because of the FSCS,” says Jeffrey. He adds: “It seems ironic and unfair that institutions that have operated in the main – with one or two exceptions – a less risky approach to business are paying a proportionately higher contribution to the FSCS, because the levies are based on the [amount held in] savings accounts.”

Another irony is that recent events have eliminated what was at one time the society’s biggest problem – protecting it from ‘carpetbaggers’ trying to take over the society to demutualise it and pocket the windfall profits. Every single demutualised building society has now either gone broke or has been bought-up by another financial institution.

The legacy of that carpetbagging mania is that the City of Derry Building Society only does business with people living in Northern Ireland. In fact, says Jeffrey, “most of our business is within Derry”. “We don’t do business outside Northern Ireland for reasons of control,” explains Jeffrey. “Control is a key word for a business of our size.” The word ‘control’ is also code for preventing future attempts at demutualisation.

Although many financial institutions are merging, this is not on the cards for the City of Derry society, says Jeffrey. It is on good terms with Northern Ireland’s other building society, the Progressive, but there are no talks about merging with this, or with the Derry Credit Union. Recent changes in law permit mergers between building societies and credit unions for the first time.

“There have been so many changes in just the last six months that I don’t think we can say never to anything,” says Jeffrey, “but certainly we see our future as an independent building society.”

And as an independent society it is doing pretty well. Its Cash ISA is at the top of the Northern Ireland best buy tables, paying up to 3%. The standard variable rate on its mortgages is 4.99%, which is not exceptional, but is competitive. So, when things are going well, why change?

Box

The Londonderry Provident Building Society was established in 1876 and changed its name to the City of Derry Building Society in 2001. “It was not the greatest name in the world,” says Colin Jeffrey. An earlier, unconnected, City of Derry Building Society existed until 1987, when it was taken over by the Nationwide Building Society.

Get insured

It is summer holiday time – which means it is also time to make sure you have your travel insurance sorted.

What a bore, you might think. But let’s consider some things that could go wrong.

Your child eats a chicken burger at dinner. The food has not been properly cooked. During the night they vomit and sweat heavily – you get scared and rush them to the local doctor or hospital.

It may be ok in the sense that there is nothing seriously wrong, but then you have to pay the bill. You will then wish you had been properly insured.

Much worse could go wrong. What if one of your family is rushed to hospital and has to be flown home? An air ambulance from America could cost £40,000 or more – and the British Embassy will not pay!

One of your group might even die – and flying the body home is a financial cost that makes your grief even worse.

Check the policy

It is good to be insured, but lots of people find their travel policy is worth less than they assumed.

A frequent complaint is that policies do not always cover missed connections. One family who wrote to me were on holiday in the Channel Island of Sark, flying into and out of Guernsey. A freak gale prevented their ferry making the return journey on time: they missed their flight home and had to pay a fortune for late bookings on the next plane back.

Never mind they thought, we have travel insurance. No, said the insurer, we specify in the small print of the policy that missed connections in the UK don’t count for a payout. Hang on, says the reader, the Channel Islands aren’t in the UK. Look again, says the insurer, we say in the small print that we treat the Channel Islands as if they are in the UK.

Similar experiences are common. They certainly do nothing for the reputation of insurers. But a common factor of many complaints is that the policies are sold by the airlines. Often these policies provide limited protection, which may not be relevant to your holiday and circumstances - and which is over-priced compared to an annual travel policy.

What to insure

Your insurance cover needs to include medical treatment and any extra cost of returning home because of illness or accident. You should also be covered if you injure someone else by accident or your property is lost or stolen.

Most people will also want insurance against missing their flights; getting stranded for days if there is a strike; or if they have to travel home urgently because of a family illness. These risks are often not covered in standard travel policies. Depending on which country you are travelling to, insurance covering the cost of legal action may also be sensible.

Some favourite holiday activities may be excluded by your policy, unless specially arranged: jet skiing and motor biking, for instance. Accidents caused by misuse of alcohol and other drugs are excluded by most insurers. If you lose belongings through carelessness you may also have to meet the cost yourself, despite being insured.

Where to get insured

Getting insured online, perhaps using a price comparison website, is very popular nowadays – and often saves large amounts of money. But it may not be the best option for travel insurance, where your requirements will often be very specific. A good insurance broker will obtain the right policy for you.

If you do decide to buy an insurance policy using a price comparison website, through the airline, or going direct to an insurer check the policy cover very carefully before confirming the purchase. Beware of ‘off the shelf’ policies that do not take into account your personal circumstances

To find an insurance broker you should go to the website of the British Insurance Brokers’ Association – www.biba.org.uk – which also has excellent tips on buying travel insurance.

Get EHIC

The European Health Insurance Card (EHIC, previously called the E111) is very important for holidaymakers within the European Union – including the Irish Republic. It is free to obtain – you apply at a Post Office or on the internet, at www.ehic.org.uk – and this entitles you to free or reduced cost medical treatment across the EU and in Norway, Iceland and, with some exceptions, Switzerland.

Q. Two years ago, I bought a flat for my son. We wanted to use Tiscali as an internet provider, but could only do this if we had a BT line installed. BT installed the line and sent me the bills. Then, in March, BT wrote to me regretting that I was leaving them. My son and I knew nothing about this. We spoke to BT, which said the instruction had come from another provider, but the staff did not know which. I was asked, for the legal record, whether I wished to leave BT and I said no. In April, the phone line was cut off. I spoke to BT, which told me to speak to the new provider – but I didn’t have a new provider! I transferred to another BT operative, who said she could set up my number again. A couple of days later, my son rang his number to be told that it was a Tiscali answering service. I phoned Tiscali and the operative said there were two addresses attached to the phone number: one was ours, the other belonged to someone else entirely. She said there had clearly been a billing error, but that I would need to speak to the accounts department to resolve this. When I spoke to them, I was told the Data Protection Act prevented any information being given to me as my name was not on the account. I asked to speak to a supervisor, but this was also refused on data protection grounds. I spoke to BT again, which said my number could be recovered the following month. But the next day BT phoned to say it could not give us the line back as Tiscali refused to release the number as it was not attached to my name. KR, Surrey.

A. We have had numerous complaints about Tiscali, but this is one of the worst and has probably been the most difficult to resolve. We were repeatedly promised that progress was being made, or that a solution found, when this was untrue. The background to this problem is that Tiscali’s systems confused your account with that of another customer – sadly another reader recently had a similar experience. “In the process of upgrading a current Tiscali customer who used to live at the same address with the same telephone number, our systems upgraded the wrong number and, in effect, seized it back,” explained a spokeswoman. Tiscali has now arranged with BT to release the number back to you. Tiscali has also agreed to pay for all costs, including mobile phone calls, that you incurred in pursuing your complaint. It is also sending you £100 as compensation and an apology for its failures. Tiscali describes its customer service in this case as having been “unacceptable”: we agree.

Q. My 87-year-old mother-in-law moved rooms within a care home, which required her phone line to move. In October, I requested the line to be moved across the corridor. As a line already existed, I was told by Pipex, which supplied the phone service, that this would take about 10 days and cost over £35. I asked if it could be done more urgently, as the phone is my mother-in-law’s connection with her family. When I phoned to check on progress I was told that the order had been cancelled – as the address of the new line was the same as the existing account. I was then told that the reconnection would involve a visit from a BT engineer, a charge of over £80 and a wait of a further 10 days. Next my mother-in-law had a letter saying that the costs would be £38.50 to transfer the line, plus another £116 for a Pipex engineer to upgrade the line. By now my mother-in-law was becoming upset, so I arranged to handle matters on her behalf. I then made several calls to Pipex, where the staff could not help me, so I cancelled the contract. I went on holiday for three weeks and when I returned, I found that my mother-in-law had received a series of threatening letters because she had not paid a bill and had been charged an extra £25 because of the lack of payment. My calculation is that Pipex in fact owes my mother-in-law £3.70 for prepaid rental. JN, Southsea.

A. Pipex is now part of Tiscali. Eventually, Tiscali has resolved this. It promised your mother-in-law a payment of £20 as an apology back in October for messing things up. But it carried on messing things up and failed to make the £20 payment. It has now closed the account and paid her £50. Tiscali was recently acquired by the Carphone Warehouse, which used to have similarly poor standards of customer service. As we have not had any complaints against Carphone Warehouse recently, we assume it has greatly improved its service. We hope it can perform the same trick with Tiscali.

Q. My friend took out a Sky subscription two years ago, after I recommended her as part of Sky’s “refer a friend” offer. Under the terms of the deal, I was entitled to get M&S vouchers for the recommendation. My friend did everything correctly to get these vouchers, but I am still waiting. JH, Watford.

A. You are not alone in this problem. Sky says there were problems with its IT system, following an upgrade. A spokeswoman says: “Unfortunately this meant a small number of customers did not receive their vouchers within an acceptable time-frame.” It has now sent your vouchers and promises that it has changed its processes “to help ensure that future offers are delivered on time”. Sky has also given you a credit of one-month’s free viewing as a goodwill gesture to recognise your “patience and tenacity” in making sure you get what you are entitled to.

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

Responses to freedom of information (FoI) requests submitted by The Independent — and made available to LGC — also show that local government pension funds are exposed to potential losses of at least £26.8m in Icelandic banks and more than £20m in Lehman Bros bank.

Analysis of the funds’ returns shows a wide divergence. Somerset County Council’s fund showed the weakest returns of those that responded to the FoI request, and did so in a format that enabled analysis. This lost 28% in value between January 2007 and January 2009 — a monetary loss of £307m.

The largest loss in money terms was recorded by the Strathclyde fund, which lost £1.7bn in two years,representing 18% of its value at January 2007. Its valuation fell from £9.4bn in early 2007, to £7.7bn at the beginning of this year.

Harrow’s pension fund was the second worst performing among the respondents. Jennifer Hydari, Harrow’s divisional director finance and procurement, explains that the fund had 10% more invested in equities than the median for funds and that it hedged half its currency risk.

“On both these factors we expect recent rises in the market and strengthening of sterling to have helped,” she says.

But she adds: “Harrow’s [fund] managers have underperformed. We are in the process of a manager review andnew appointments will be proceeding. Overall our strategy is sound and is a long-term one.”

The trustee’s overall investment strategy is to maintain a long-term return similar to that expected from equities but with reduced risk and volatility

Sue Timbrell, independent chair of the Audit Commission Pension Scheme

The best performance reported came not from a local government fund, but from that of the Audit Commission — which will be a relief to the organisation after the widespread criticism it received for holding £10m in Icelandic investments.

It actually reported an increase in values in a period when stock prices and fund values were generally
dropping by between 20% and 40%. Its value increased by 4%, from £483m in December 2006 to £503m two years later.

Sue Timbrell, independent chair of the Audit Commission Pension Scheme, says: “Of course we are not immune from the challenges all pension schemes are facing in these uncertain times, but the much wider diversification we have been able to introduce has gone a long way to give us the stability in our investments that we intended.”

The fund’s increases were, she says, almost solely attributable to its use of investments to protect it against the impact of interest rate movements.

Returns on investments in ‘growth assets’ — those owned in the expectation of increased value, as opposed to income generation — were negative, but because the fund invested in a wide range of products those losses were much smaller than if they had been in equities alone.

“The trustee’s overall investment strategy is to maintain a long-term return similar to that expected from equities but with reduced risk and volatility, and it is clear the benefits of this approach are now really showing through,” she says.

The strategy, which served the commission’s fund very well during this period, was to move away from its ‘growth asset’ classes of equities and property, and it did so just before these fell substantially in value.

The fund then reduced its risks by diversifying its holdings and hedged against interest rate movements andliabilities inflation. New investments were made into three diversified growth funds, which invested in a mix of equities, private equity, commodities and infrastructure.

The best local government performance was by Orkney Islands Council’s fund, which reported a fund valuation of £101m in 2007 and the same in 2009.

A fund spokeswoman says: “Orkney Islands Council takes a long-term and conservative approach to the management of pension fund investments. The council is satisfied with the current performance of its appointed fund manager, which is measured over a rolling five-year period against an agreed benchmark.”

Yet perhaps the most interesting question is probably how local government funds avoided falling more heavily in a period of steep economic decline and losses in value across a wide range of asset classes.

Research by Aon Consulting found that private sector employer schemes fell by 28% in the year from October 2007. And the FTSE100 index fell from about 6,500 to about 4,500 in the period analysed, around 30%, and by much more from peak to trough.

Commercial property values fell by more than a quarter in 2008 alone. Bond defaults rose substantially.

This led one pensions consultant — who did not wish to be named — to doubt the reliability of funds’ valuations.

However, even with these valuations, the level of pension fund deficits is now substantial — not least because more realistic assumptions about future liabilities have been adopted.

North Yorkshire’s pension fund says it now has a deficit equivalent to half its projected liabilities. Tom Morrison, principal accountant at North Yorkshire County Council, points out that between mid-2007 and late 2008 global
equity markets fell by more than half.

Actuaries’ assumptions about bond yields and inflation also changed, and contributed to an increase in the value of liabilities of more than 20% over the same period.

The combined effect of this and the markets’ decline over a relatively short period has had a very significant effect on the snapshot position of the fund as at 3 December 2008.

“The fund’s investment strategy includes a recovery plan, with 25 years remaining out of an initial 30, aimed at eliminating the deficit,” Mr Morrison says.

“This approach allows us to take a pragmatic long-term view of asset performance rather than be drawn into focusing on snapshot valuations distorted by an unprecedented level of market volatility.

“Our investment strategy is regularly reviewed and we remain confident that it appropriately addresses thecircumstances of the fund.”

The total fall in value of Hertfordshire County Council’s fund over the two years was 23.54%. A fund spokeswoman says that this should not be regarded as unusual.

She said the fund followed good practice by measuring itself against its own benchmark, rather than against the performance of other funds.

“Performance against benchmark varies and the county council’s investment committee monitor it closely and take action when necessary.

“Hertfordshire’s asset allocation is not out of step with other local authority pension funds,” she says.

It is interesting that councils’ pension funds have been much less affected by the collapse of Icelandic banks than have their sponsoring authorities.

The largest exposure in an Icelandic bank reported by a local government pension fund is at Kent County Council, where the fund’s exposure of £16m was included in the £50m reported by the county council.

But overall Kent had one of the stronger returns, having lost only 12% in the two-year period — underlining the point that the Icelandic exposures were relatively small compared with the funds’ total value.

There was, in fact, a wider exposure to potential losses from Lehman Bros — the failed US investment bank, whose collapse sparked the global financial meltdown. Several local government funds had invested in Lehman’s through bonds, while others held direct or indirect equity stakes.

Westminster lost £1.8m through its shareholding in the bank. Strathclyde stands to lose £2.9m on its Lehman bonds. And Lothian has £1.97m at risk, through exposure on foreign exchange contracts.

More surprising than the liabilities in Iceland and Lehman Bros is that local government funds have apparently not been affected much more severely by the global downturn.

But, as North Yorkshire revealed, when funds faced deficits anyway, any loss of value increases their problems in meeting liabilities. And that crisis is one that will not be resolved, even if and when the markets recover.

Local government pension funds adopt different investment strategies but they all have the common aim of raising enough money to keep paying their members’ pensions.

They cannot do that if their income is too low, but obligations to council offi cers past and present who belong to the schemes mean the pensions must be paid.

That imperative is likely to force consideration of some radical options.

Health bodies in Northern Ireland face spending pressures that risk pushing them into deficit, warns the Northern Ireland Comptroller and Auditor General, John Dowdall, in his annual report on the health and social care sector for last year.

Dowdall also warns that an over £1bn major capital redevelopment programme is “a significant test” for management. He says that while there have been improvements in achieving better healthcare, more needs to be done to improve people’s health in Northern Ireland, in particular to reduce ill health related to smoking and obesity.

Progress has been made in reorganising the Northern health and social care structure, with four health and social service boards and other agencies having been abolished, and other agencies merged, from April this year. But this has led to staff compensation of £16m, with more to be funded for additional redundancy and early retirement costs. Savings will take time to cover this outlay, says Dowdall.

The accounts for the Western Health and Social Care Trust were qualified by Dowdall, because of contracts not properly awarded and managed by one of its predessor bodies – the Sperrin Lakeland Trust. Payments for a £129,000 management consultancy contract did not adhere to guidance, while £2.4m spent on specialists for work on capital projects were “deemed to be outside the approved business case”.

Progress is being made, says the report, in tackling a £10m annual loss from prescription fraud; a £1.4m fraud committed by pharmacists, GPs, opticians and dentists; and in recovering £2.2m from a pharmaceutical price-fixing cartel.

Speculation is growing about the future of one of Londonderry’s largest employers. Homeloan Management Ltd - HML - employs 444 staff in the city, administering mortgages on behalf of banks and building societies. The company specialises in administering loans in the troubled sub-prime mortgage sector.

HML is owned by the Skipton Building Society, which was recently downgraded by the Moody’s credit ratings agency and put on negative watch by another agency, Fitch’s.

The downgrade was related to Skipton’s rescue takeover of Scarborough Building Society at the end of last year. A spokeswoman for Skipton said the society is working with both agencies to strengthen the ratings.

A merger is currently taking place of HML with SMS, the mortgage administration division of the Scarborough Building Socierty. HML has four divisions in Derry, Skipton, Burnley and Glasgow, as well as the SMS facility in Scarborough. It administers assets of £46bn for 30 lenders.

According to reports in the specialist financial press, Skipton is seeking to sell HML, which could strengthen its capital reserves to improve the society’s credit ratings and provide cash to make further acquisitions - possibly of other troubled building societies.

A spokeswoman for the Skipton Building Society refused to confirm or deny suggestions that HML is for sale. “We do not comment on rumours and speculation,” she said.

HML has been closely associated with the dramatic rise in sub-prime mortgage lending – which has been blamed for the global collapse of the financial markets. The company is now seeking to broaden its range of clients.

In a recent interview in the magazine Mortgage Strategy, HML’s managing director, Brian Brodie, said that he did not believe that the sub-prime market is finished. “I’d like to think of this as a hiatus, rather than the sector being dead and buried,” he said. Brodie added: “We need to expand beyond start-ups and sub-prime to deal with some of the more mainstream mortgage lenders.”

The trade union representing staff at Skipton Building Society and HML is Surge. Its vice chair, Lynda Kemp, said the union was unaware of plans to sell HML. Asked whether it had concerns over the future of the operation at Derry she said: “I am not prepared to make any further comment.”

Since then the UK Government has rescued the Royal Bank of Scotland – including Ulster Bank – the Lloyds Group - including Halifax and Bank of Scotland - and Bradford & Bingley, as well as Northern Rock.  The Irish Government nationalised Anglo Irish Bank and rescued Bank of Ireland and Allied Irish Banks (which owns First Trust). 

So what should you do to keep your money safe?

Shareholders are the losers

The people in the UK who have lost money in the banks’ collapse have been the shareholders – which actually means lots of us, because our pension funds owned many of the banks’ shares.

But people who had money in savings and current accounts in the UK and the Irish Republic have had their money protected.  Even the individuals who saved in the Icelandic banks are getting their money back.

Compensation

Protection schemes guarantee much of our savings.  The UK’s Financial Services Compensation Scheme (FSCS) provides a 100% guarantee for all savings in UK banks and building societies up to £50,000.  This scheme applies to UK banks that are fully Financial Services Authority (FSA) authorised and regulated - including Northern Bank and First Trust Bank. 

The Bank of Ireland is not part of the UK scheme, but instead has a 100% guarantee from the Irish government.  This also applies to accounts taken out with the UK Post Office – whose bank accounts are actually run by the Bank of Ireland.  Some people are concerned about this as the Irish government has had its credit rating downgraded – but Dublin insists it is able to meet the guarantees were this to be necessary.

UK compensation arrangements are complex and difficult to understand.  There is a £50,000 limit, per person, per institution.  But it is not always obvious what is regarded as a single institution. 

RBS owns several bank brands, including Ulster Bank and NatWest.  Each of these three is separately authorised and has a separate compensation limit of £50,000. 

But some RBS brands are authorised as part of RBS.  The £50,000 limit for RBS is shared with Direct Line savings accounts and The One Account.  The same is true of HSBC and its First Direct brand.  To be fully protected by the £50,000 limit, savers must have no more than this in all the accounts offered by a single authorised institution.

To find out which bank brands are regarded as ‘linked’ for the purposes of the compensation scheme it is necessary to visit part of the FSA website – www.moneymadeclear.fsa.gov.uk/pdfs/linked_deposits.pdf.  The ‘linking’ of deposit protection across apparently different banks is very unsatisfactory.

The safest institutions

National Savings & Investments is a government agency and money saved with it is fully guaranteed.  National Savings products include premium bonds and a range of savings and investment accounts and bonds.

The Government has also issued a 100% guarantee to savers in Northern Rock: the bank is committed to giving three months’ notice if this changes.  Although RBS is mostly government-owned, the same guarantee does not apply: savers’ protection is limited to £50,000.

Credit unions

Northern Ireland credit unions are not covered by the Financial Services Compensation Scheme – though this may change.  (British credit unions are covered by the FSCS.)  Credit unions here are covered by one of two deposit protection schemes run by the credit union movement. 

Credit unions that are members of the Irish League of Credit Unions are covered by a protection scheme that can pay up to £10,000 per saver.  Credit unions belonging to the Ulster Federation of Credit Unions have 80% cover for deposits, without there being a maximum.  Both schemes are discretionary, but ILCU and UFCU intervene at an early stage if unions are in difficulty and have prevented any from closing.

Play your cards right

Best credit cards

Tesco PF Clubcard Mastercard   0% for 12 months

M&S Money Mastercard              0% for 10 months

Lloyds TSB Advance Mastercard 0% for 6 months

Best savings account

Progressive Building Society        2.75% for £500, postal 7 days notice

Best Cash ISA

City of Derry Building Society      2.25% at £1,000; 3% at £50,000

Five year fixed rate mortgages

Chelsea Building Society                               4.50%*

Ulster Bank                                         4.65%*

Bank of Ireland                                 4.99%*

Progressive Building Society        5.50%*

(* Conditions apply)

Supplied by Moneyfacts – www.moneyfacts.co.uk

Marks’ interpretation of events is supported by many of the farmers. Farmers for Action claims to represent 12,000 farmers and is involved in discussions over the future of DFB. Its chairman, David Handley, told the News: “From the dairy farmers’ perspective, we were awaiting the news for some considerable time. It was dragging the industry down.”
Handley is not critical of the Co-op Group for withdrawing its contract from DFB, saying this was probably spurred by the problems with the dairy co-op, rather than causing the crisis. He says there were deep-seated operational problems within DFB, which the farmers’ co-op had been unable to grapple with. This also meant, he alleged, that the quality of the product was not always adequate for the market.
“The processing and the plant were not of a very modern type,” says Handley. “There are more progressive [dairy] co-ops out there who said they could do better.” It was this, he suggests, that persuaded the Co-op Group to move its contract. “The Co-op [Group] stuck with them for some time.”
It is also reported that another factor is that many DFB members are based in the most remote parts of Britain. Collecting milk from these farms is expensive and may no longer be viable for a milk processor, one fears. This would be a potentially devastating blow to some Welsh hill farmers and their communities, in particular. Welsh ministers have been especially active in responding to the DFB collapse.
The dairy industry itself is facing increased pressures across the UK. It “has reduced at such a dramatic level,” says Handley. But ultimately, he believes, the loss of DFB was inevitable. “This is something nobody wanted, but it had to happen and it had to happen quickly.”

Q. My sister-in-law hired two cars through an internet car rental broker to travel from Turin airport to a chalet we stayed in over Christmas in France, prepaid by debit card. On the window of the car hire booth, a hand-written note advised that additives should be added to diesel fuel to prevent it from freezing. Both cars had a full tank of diesel. Neither car needed refuelling during our week away: we used just one car and only a few times. When we tried to start our homeward journey the unused car would not start, because the fuel had frozen. We contacted the car hire company, which advised us that we should not have taken the car out of Italy. It turned out this was in the very small print of the car hire agreement.

We had to remain with the car until recovered, missing our flights home. The car hire company said we did not qualify for any assistance in getting back to the airport. It cost six of our party £2,700 to return to the UK by train. We were charged an extra £230 by the car hire company – using our credit card deposit – for the recovery of the vehicle. The internet brokerage company is only contactable by email and did not respond to our enquiries. How can we pursue the matter to recover our money? HL, by email.

A.There are no obvious grounds for you to recover your costs from anyone. You explained, when we contacted you, that “my sister-in-law didn’t tell [the car hire company or brokerage] we were taking the car out of Italy, but neither did they ask: we assumed it was OK to move around inside the EU”. That was a mistake, compounded by you not checking the terms and conditions of the agreement. Although the EU has a ’single market’ for goods and services, this does not mean that national boundaries be ignored. In fact, you may not even have been insured to drive the car in France – so you risked getting into even more serious difficulties.

The UK European Consumer Centre (UKECC) (www.ukecc.net) is an expert advisory body that assists consumers in dispute with a trader based in another EU country. A spokeswoman for UKECC says: “Car hire contracts always stipulate that when hiring a vehicle, a consumer is bound to notify the car hire company if they are taking a vehicle out of the country where it is collected from – this is due to insurance requirements imposed on all car hire contracts.

“Consumers also have an implied duty of care to look after a vehicle while it is in their possession. It is a consumer’s responsibility to read and understand any terms and conditions within a contract – even if it is within the small print – and a consumer’s failure to read and understand these terms do not make a trader liable for any assistance or redress. In cases where the failure of a vehicle is not due to a breach of contract on the part of a trader, it is unlikely that they are obliged to reimburse a consumer with costs incurred.” The UKECC adds that it is worth checking your own travel and car insurance policies to see if they cover your problem. But we think it is very unlikely they would do so.

Q. I made three hotel bookings for last month with Bookinhotel.com. When I made them last December my Visa provider, MBNA, phoned to ask why my card was being used in Istanbul. I had assumed the company was based in the US or Holland. MBNA allowed me to complete my bookings, but then cancelled my card to protect itself. Later, I needed to change our plans and cancelled two of the bookings.

Bookinhotel’s conditions stated that accommodation could be cancelled without penalty up to a few days before the take-up date. In January, it confirmed the cancellations and said the charge would be refunded, without penalty, via my Visa provider within 15 days. No credit has appeared to date. MBNA said it could not help because I had cancelled the bookings. Phone calls and emails to Bookinhotel are met with pre-recorded messages, bland assurances by email and general non-cooperation. AR, Cornwall.

A. Bookinhotel ignored our requests to discuss your complaint. At our behest, MBNA issued a chargeback against Bookinhotel, so you are now fully refunded. There was a delay in processing the chargeback, as MBNA had to wait to do this until after the date of the accommodation that you originally booked. MBNA tells us that Bookinhotel initially told MBNA that it would credit you with the funds itself, but failed to do this. We would advise readers to choose websites with care when booking hotels, holidays, concert tickets and other items. We are not making any allegations against Bookinhotel, but the fact that a website looks professional is not a guarantee that there is a company behind it that is able to properly service your requirements, or that it will make a refund if there is a problem. It can be difficult to pursue consumers’ rights with a company based in another country. At least you booked with a credit card, enabling you to obtain a full refund.

Q. We ordered a combined TV, phone and broadband package from Sky. It could provide the TV and phone, but not the broadband because of systems constraints. I regarded this as breaching the contract, so rescinded it. Sky accepted it should refund £169.99.

But in October Sky deducted this amount from my bank account instead of paying it to me. After I notified Sky, it refunded this in November. But Sky still owes us the £169.99. Each time we request this, the payment is declined because the computer says the amount has already been made. Can ‘The Independent’ get our money back for us? SE, Eastleigh.

A. Yes.Sky processed your payment with alacrity when we contacted them.

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

A confidential report presented to the council this week – written by the council’s chief executive and town clerk, Valerie Watts, and obtained by the Belfast Telegraph - details a radical shake-up of its organization, which will lead to the deletion of a large number of middle and senior management posts.  The proposals were approved by councillors in a private meeting.

Seven council departments are to be merged into three directorates, with many supervisory jobs deleted.  The role of deputy chief executive is to be axed.  Some staff recruitment will be frozen until the reorganisation is completed.  Transfers of some responsibilities from the Northern Ireland Tourist Board and the Ilex urban regeneration company are to be requested, the report suggests.   It is unclear how many jobs in total are planned to go.

Restructuring is needed now to prepare the council for its amalgamation with Strabane District Council in 2011, wrote Ms Watts, who was appointed in July last year.  The two councils are to merge as a result of the Review of Public Administration (RPA).

Valerie Watts said: “The proposed restructuring will enable council to be more responsive, improve its services and strengthen its resources to meet the challenges ahead for the city and the region.  Local government must be dynamic and flexible and our challenge is to provide successful, effective, accountable and innovative public services for all.

“The transformation report arises from key change drivers that ensure services are based around the needs of the user and are more focused and personalised.  The changes will also drive quality and innovation throughout the organisation.  The report will be considered by trade unions, with a timetable and process for delivery to be agreed over the coming weeks.   The fundamental change is the reconfiguration of services into three directorates to bring improvements through efficiencies, joining up services and moving resources to the frontline services.”

But the main trade union representing council staff, Nipsa, issued a statement saying it “reacted angrily” to the proposals.   Nipsa assistant general secretary Bumper Graham explained: “These plans have been hatched by the town clerk without any consultation either with the trade unions, or indeed with the partner council, Strabane.  Nipsa is not going to accept such behaviours, which is in breach of our members employment rights and shows total disregard for the industrial relations process.”
 

“It has been accepted by all those involved that the RPA process is complex and difficult, requiring detailed assessment and full and open engagement. What we have with this plan is what we have feared the use of RPA to hatchet cut jobs and to seek to have the bigger of the two councils imposing its plans on the other council.  Unless there is an immediate withdrawal of this plan Nipsa will consider a range of measures necessary to protect our members interests in both Derry and Strabane councils, including, if need be, industrial action.”