Questions Of Cash

Why has Abbey changed my mortgage term?

Q. Abbey has changed my mortgage term from 25 to 33 years without my permission. I have tried to find out why, but I have not received a reasonable explanation. Abbey has also failed to provide, as requested, a copy of the original mortgage agreement.
DG, Wembley.

A. The root of the dispute, according to Abbey, dates from November 1987 when its mortgage interest rate rose. You chose not to pay the higher rate, thereby extending the loan period by about seven years, and "made a conscious decision to have the term increased", in the words of Abbey. Matters became more confused, though, when you redeemed your mortgage in January 2005. Your payment of £8,788.52 was applied twice in error by Abbey, leaving you with an apparent credit balance on your account in excess of £8,700. Abbey then repaid this to you, which you cashed. When Abbey realised it had wrongly paid you the money you rejected its request to repay the amount, saying you believed the payment was in compensation of your claim that the bank had been wrong to extend the period of loan repayment. Abbey then took you to court, won the case and obtained a charge on your property to enforce recovery of the money.

While Abbey was obviously inefficient, it is understandable that the bank is not going to write-off £8,700 that it paid you without good reason. Equally, no mortgage lender is going to allow a borrower to pay less than the due amount without extending the mortgage term. "You simply cannot pay less and expect to pay off your mortgage on the date originally intended," as Abbey puts it. Incidentally, Abbey also rejects your claim that it failed to provide copies of the original mortgage documentation - it says it sent you a copy of the mortgage offer last year and a copy of the signed contract earlier this year.

Q. Powergen, our electricity supplier, has sent us a bill for £1,532 - when our monthly bills have been £25. I do not understand how they have arrived at this figure, though it does seem that for some months after switching suppliers our meter was not read.
RM, Hitchin.

A. Powergen admits it wrongly read your meter when you moved in. The problem was made worse by subsequent estimates. Powergen has apologised for the errors and says the bill should actually be £300.49. As a gesture of goodwill, it is writing off £50 of this and is making an offer to you of staged repayment over the next year.

Q. Woolwich admitted an error back in January, but I still haven't received a refund despite several letters from them telling me it had been arranged. The service I have received is shocking.
WB, Stamford.

A. Even Woolwich - a division of Barclays now being phased out - regards your criticisms as justified. This is "quite unacceptable service", says a bank spokesman. He adds: "Having looked into this I am at a loss to understand how such a straightforward matter as a refund could have gone so wrong and taken so long." Your £30 refund has now been sent, along with an ex gratia payment of a further £30 and two bottles of wine.

Q. To try to make my pensioner's income go further I deposited money with Cahoot, because of its attractive interest rates. But I subsequently failed to access my online account because I forgot one item of "memorable data". I respect the security requirements, but at the age of 80 I find this is not my game. I have written twice to cancel the account, but without response. Can you help?
LM, Brentwood.

A. Cahoot - Abbey's online bank - has closed your account and refunded your deposit plus interest. It apologises and has agreed to send you £50 as a gesture of goodwill.

Q. In 1989 I placed a lump sum into a Provident Mutual Personal Pension Scheme, which performed very well. Since Norwich Union took over the policy six years ago there has been very little increase in value. Since 2001 the value has increased by only 5.75 per cent. Prior to this the fund was increasing by an average of over 10 per cent per annum. In 2001 I placed another lump sum into a Norwich Union Pension Fund and this one has increased in value by 23 per cent. I get the impression that Norwich Union are putting their efforts into their own funds and not those taken over from other companies.
MW, by e-mail.

A. Norwich Union strongly disputes that the weak performance is connected to its investment management priorities. At the beginning of the decade the stock markets fell severely and your Provident Mutual fund suffered badly. The Norwich Union fund has a higher proportion of its investments in equities than has Provident Mutual, enabling the Norwich Union fund to recover more strongly as equities gained value.