Questions of cash: Grammar school teaches a harsh lesson

Q. The son of friends of mine took an exam for entry into a private school, Hulme Grammar in Oldham. He passed and was offered a bursary. My friends still couldn't afford the fees, but were offered more financial assistance by the school and took up the offer. The school then increased the fees by £30 a month, making it unaffordable for my friends, a support teacher and a clerk. They accept they'll lose the £500 deposit, but the school is demanding more than £2,000 as a cancellation fee. TS, Oldham

A. We have been in continual contact with Hulme Grammar for four months. In its most recent letter to your friends, the school said that its board of governors had decided that "they are unwilling to conduct discussions through a third party such as Mr Gosling". Hulme Grammar has not responded to our further efforts at communication. The school's latest proposal to your friends is that they should pay an additional £641.66 as a cancellation fee – which your friends have accepted as preferable to an ongoing legal dispute.

Q. I decided to use my £7,000 equity ISA limit for the 2006/07 year on 2 April this year. I contacted my IFA, who is self-employed but an agent for a well-known company. I gave him my account details for a Maestro transaction, which he promised to complete. I went on holiday, but on my return, in the new financial year, I found the transaction had not been conducted. The IFA has apologised, but I have now lost both my last year's ISA allowance, and interest. What should I do? JM, by email

A. You should demand a significant amount of compensation from your IFA. However, you regard the IFA as a "friend" and have declined to give us his details to make representations on your behalf. This type of situation has been reported to us before – some IFAs appear to use the cloak of "friendship" to get away with poor service. Your "friendship" almost certainly would not have prevented the IFA from accepting the commission payment. In future, we suggest you only use a professional adviser who you feel able to lodge a complaint against if the service is poor. If you feel you would be prevented from doing this because of friendship, perhaps you should use a different adviser.

Q. My NatWest bank account was charged with £254.75 on 27 December last year for a supposed transaction with www.eworldproc.com. I challenged this as a disputed transaction and my account was credited. But NatWest then contacted the website, which confirmed the transaction and quoted my authorisation number on the back of my card, and my account was again debited. This was a gambling website that I have never used and which appears no longer to be trading. Why has NatWest accepted the word of the website rather than that of a long-standing customer? SW, Cheltenham

A. The standard procedure of NatWest and other credit-card issuers is that where a customer challenges a transaction, it investigates and forwards to the customer details of the recorded transaction. It is then up to the customer to indicate if the transaction remains disputed. In your case, NatWest says you did not pursue your challenge to the transaction after it supplied the information from the merchant, so it assumed you had accepted the transaction as valid. In fact, the transaction appears to be fraudulent and remains disputed by you.

NatWest accepts that the transaction was not approved by you and has again credited your account with the £254.75. It is not suggested that the website was party to the fraud – and it has now ceased to operate.

Q. I spent several weeks in 2003 living in my boat, between Alderney and Cherbourg, before (I thought) sailing round the world. But at Portsmouth the boat had a problem with the exhaust and had to be towed to Chichester. The next day I found the boat had been moved, I smelt burning plastic and saw that a petrol can had been left on the stove. When I went to investigate, a fire started. The fire brigade concluded there were no suspicious circumstances, but my insurer, Haven Knox-Johnston, refuses to meet my claim of £28,500 and has accused me of starting the fire. I had to sell the boat under the insurer's instructions, so now have no boat nor money to replace it. The ombudsman spent two years considering the case before deciding it was outside its remit because of the allegations. My solicitor says it would take £10,000 to take to court. The police will not take action because the fire brigade states that no crime was committed. What can I do? TF, Chichester

A. Haven Knox-Johnston is a trading name of Amlin Underwriting. Amlin engaged an independent fire expert to assess your claim, who concluded that the fire was the result of arson. The fire brigade's assessment that the most likely cause of the fire was "accidental" does not require either the assessor or the insurer to accept this view. You have no alternative, if you wish to pursue the case further, than to take the insurer to court. Any legal action is not only costly, but also very uncertain. Life can be unfair.

Q. My wife and I had a PEP investment with Scottish Mutual, which performed well initially, but then the value fell badly. To withdraw from the investment would have incurred a "market value deduction". So we had a penalty for staying in or a penalty for pulling out. Is this a deduction that is similar to the "illegal" bank charges? PW, Hertfordshire

A. Banks argue that their charges are not illegal, and a definitive view about their legality has not yet been determined by the courts. The issue of bank account charges is being examined at present by the Office of Fair Trading, but the OFT does not have the power to review the charges for non-banking financial services, such as investments. These are regulated by the Financial Services Authority.

The FSA is currently reviewing the issue of the application of market value reductions (also called market value deductions) on with-profit funds. But MVRs are not applied on collective investment schemes, such as PEPs. Fund managers are required to establish an accurate market value of the underlying assets when an investor withdraws – to do anything else would be unfair to other investors.

Q. I have been charged £39 by Halifax for a failed direct debit. But I was overdrawn by just £1.18, because of a slight oversight in my control of my internet account. AC, by email

A. Halifax's charges are generated automatically when a breach of the terms and conditions takes place, no matter the size of an unauthorised overdraft. In your case, as a gesture of goodwill, it is refunding the £39.

Q. Thanks to the previous intervention by Questions of Cash (5 May 2007), British Gas called off its demands and threats for me to pay a bill of £103 that I didn't owe. But now we are being pursued all over again for £133. Can you help us again? TL, Leicester

A. A spokeswoman for British Gas says there has been confusion here, because you were sent a refund of £133, which you also deducted from your next bill. BG says its demand for the £133 was therefore correct. However, it accepts that you made an error in good faith and it is therefore writing this off, too.

Questions of Cash cannot give individual advice. Do not send original documents. Write to: Questions of Cash, The Independent, 191 Marsh Wall, London E14 9RS; cash@independent.co.uk