Questions of Cash – March 2016

Q. I hired a van from Europcar last August.  Some scratch damage took place to one side of the vehicle while parked.  I was unaware of this until I returned the van, but accepted responsibility.  As I hadn’t taken out any excess protection, Europcar retained the excess of £1,000.  I expected the repair would cost less than this.  But a damage report estimated the repair cost at £1,540.70.  This included 4.3 hours of repair work, plus 10.2 hours of work unrelated to the scratch.  I challenged this and Europcar sent me photographs of ‘other damage’.  This was nothing to do with me.  Late in November, Europcar accepted that I was only responsible for the original scratch damage.  But when the invoice arrived it showed an estimate that included 7.9 hours labour at an hourly rate of £45, plus VAT.  I have complained to Europcar about the increase in labour hours, but it says it is not willing to change its decision.  MW, Perth.

A. Europcar now accepts that you are correct.  Its spokeswoman says:  “The company is sorry that [the reader] was overcharged and can advise this was due to an error on the invoice regarding the number of labour hours calculated to repair the scratch.  Europcar extends its apologies to [the reader] for the error and can confirm this has been corrected and has therefore, refunded him for the incorrect charge.”

Q. I have received a letter from a debt collection agency, C.A.R.S., seeking payment of £22.17 for a household insurance policy with Bradford & Bingley.  But I phoned Bradford & Bingley last November to say that I was not renewing my insurance, which expired that month.  The contact centre told me that my records had been amended to show that I had opted out of auto renewal and I could ignore the renewal letter when it came. Since then I have received two automated voicemails saying I need to call Bradford & Bingley urgently on a number that was provided.  When I did so, I was put on hold for ten minutes while no one answered.  HP, Sussex.

A. Bradford & Bingley was rescued by the Government in 2008, during the financial crash.  Under arrangements agreed in relation to European state aid rules, Bradford & Bingley was closed to new business. It sold its insurance operations to Budget Insurance Services Limited (BISL), which continues to provide insurance products under the Bradford & Bingley name.  The Government’s ownership of Bradford & Bingley was handled by UK Asset Resolution Ltd.  It passed on your complaint to BISL, which now accepts there is no debt to be collected.  BISL wrote to you directly to explain that the supposed debt related to a small charge of £2.17 due at the end of your policy, which should have been cancelled as a result of your conversation with the call centre.  This sum was then shown as a debt, with a non-payment charge added to it.  BISL apologises for seeking to recover this and has sent you compensation of £100.  C.A.R.S. confirms there is no adverse entry on your credit record.

Q. I have taken a £60,000 lump sum out of my pension provision, while continuing to work.  I have used £20,000, which leaves me £40,000 available to save or invest.  Given the current turmoil on the stock exchange, and the risk of share values falling further this year, I do not want to put money into shares.  What are my best options?  I am 66, but I am not intending to retire in the immediate future.  AN, London.

A. Danny Cox of advisers Hargreaves Lansdown responds: “Beyond the stock markets there are few options which provide reasonable returns with capital security. The interest on cash ISAs are at a five year low, with little prospect of improvement for perhaps the remainder of 2016 and beyond. However your money is safe and protected by law if the bank or building society goes bust, to a maximum of £75,000 per person per institution.  The interest on a cash ISA is tax free, which is more valuable the higher the rates of tax you pay. The ISA allowance is £15,240 this tax year and next, allowing you to shelter the majority of the cash from tax over the next month.  Premium Bonds are a tax-free alternative with 100 per cent safety, but no guarantee of a prize. You might win more than the interest you would receive in cash.

“Peer to Peer – P2P – products are an alternative form of finance. Lenders are matched with borrowers to provide the potential for much better interest returns than on cash deposits. It is a relatively small but growing market.  However, it is important to understand the risks. P2P is an investment which means that if borrowers default there could be a loss of interest or capital. The risks are managed by credit checks and ‘pooling’ so investors don’t lend to an individual, but to a pool of people.  To date, default rates have been very low.  P2P isn’t covered by the Financial Services Compensation Scheme (FSCS).  It is understandable to be concerned about the stock market given the current volatility.  However, the entry point – the price you are paying for shares now – is significantly cheaper than it was in April last year. If you can afford to take a longer term view of at least five years, a proportion of capital invested into diverse UK equity income funds should prove more profitable than cash deposits.”

If you opt for a cash ISA, the best interest rates offered – according to MoneyFacts – are from the State Bank of India, which is offering 2.60 per cent on a five year bond, 2.30 per cent on a three year bond, or 2.00 per cent on a two year bond.  These rates are only available if you deposit £15,000.  The State Bank of India is regulated by the Financial Conduct Authority and subject to FSCS protection.

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