Questions Of Cash: Atol needs all facts before spending public cash

Q. I booked a holiday in spring last year using flights with Goldtrail, which collapsed last summer. We have been waiting ever since for the refund. It was difficult for us to know how much the flights cost, as they were lumped together with hotel and a cruise, booked through a travel agent.

We have been asked for further information by the Civil Aviation Authority and it is difficult to know what else anyone could want. We have sent copies of bank statements, our credit card statement and a copy of the cheque. The holiday deposit was £775.20, which we paid in April by credit card, and the balance of £2,296 was paid on 14 June by cheque. We had to pay an extra £1,196 in July for replacement flights. SM, Gwynedd.

Q. In July last year I bought two return air tickets to Bodrum, Turkey, flying with Goldtrail and booked through a travel agency. Two days later, Goldtrail went bust. The agency insisted I had to wait for my refund to come through Atol which I was promised would take 12 to 16 weeks. More than six months later, I am still waiting. The travel agency has been uncontactable and offered no guidance on when I might receive a refund. The total cost of the flights was £524.28, and has been on my 22 per cent APR credit card since.

In December I received a letter from a company called Huntswood, acting for the CAA, requesting additional information. This is the only correspondence I have had. When I phone on the number provided there is an automated response telling me they can't speak to me now, and then cuts me off. As well as the refund for the flights, I want the CAA to pay for the interest I have had to pay on the cancelled flights. OM, London.

A. When Goldtrail collapsed, PwC was appointed administrator, but refunds were the responsibility of the Civil Aviation Authority under the terms of Goldtrail's Atol bonding. Claims to the CAA must be processed via the travel agency – which caused problems for both readers. The CAA said it would normally process refund claims more quickly than with the Goldtrail collapse.

It explains: "Goldtrail's failure was unusual: it is rare for a travel operator to go into administration at the height of the summer, which unfortunately meant more people than usual were affected and the CAA is sorry to hear of your readers' experiences. Our number one priority is making sure people get their money back as quickly as possible. There are still a few claims to be paid and we hope to have these settled in the very near future.

"The Atol scheme is unlike an insurance policy: the funds available is public money held by the Air Travel Trust. Therefore a sufficient amount of evidence is needed to support a claim in order to validate it and pay it. If a claim is incomplete, with items such as receipts and proof of payments missing, the process can be slowed significantly as we try to establish the validity of the claim, and ensure public money is spent fairly."

Both readers' claims have now been processed, after a wait of more than six months. But the CAA is unable to pay any compensation for indirect losses, such as the cost of borrowing the money to pay for the flights.

Q. I have been charged high fees by Smile bank. It initially charged me £30 for a failed direct debit payment to my mortgage lender, First Active, which charged me an additional £25. I have two accounts with Smile, each with a fee-free overdraft of £500. My mortgage is paid by monthly direct debit on the first of each month.

At 8.30am on 1 February I logged into Smile internet banking. My first account had a negative balance of £700 because my mortgage direct debit had been processed. I immediately transferred funds from my other Smile account, so that both accounts were in credit. At some point after this, Smile claimed the money back from First Active, causing me to miss a mortgage payment, and charged me £30 pounds. I complained to Smile, which agreed to waive its fee, but it has not admitted any wrongdoing, nor offered to pay the £25 that First Active charged for the missed payment. I am angry with Smile as presumably it reclaimed the direct debit during business hours on 1 February, by when there were sufficient cleared funds in my account. ST, by email.

A. The Co-operative Bank, which owns the Smile brand, says the direct debit payment was returned to your account on 1 February because there were insufficient funds in your account. "Although [the reader] transferred funds into his current account on 1 February, our terms and conditions make it clear that sufficient funds should be available at 9pm the working day before a payment is due to be made," the bank said. "If sufficient cleared funds are not available at this time, we may decline to make a payment out of an account and the associated charges will apply. This is because many of our processes are automated."

Smile has waived your £30 fee because it has a policy that it will not invoke charges where a customer exceeds their limit only once in a year. However, it does not accept it made an error, so it is "not in the position to refund the charge incurred from the mortgage company". The bank adds that it if you had warned Smile before the due date of insufficient funds, it could have arranged to authorise the payment manually.

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