Which? must question itself

THE MONTHLY magazine of the Consumers' Association, Which?, reviewed buildings and contents insurance in its September issue, and in both categories the Best Buy was . . . Municipal Mutual Insurance.

MMI is struggling to avoid liquidation. It halted claims for a week and is now selling the saleable parts of the business, including the home insurance division.

So should Which? be embarrassed about this Best Buy? Not at all, says its financial expert, Jean Eaglesham.

She explains that the magazine was taking a comprehensive look at the market and thus included all comers. The Department of Trade and Industry had not - and still has not - pulled the plug. 'We cannot second- guess the regulators,' she says. 'With hindsight it is still difficult to play. Our advice to policyholders is: sit tight.'

It seems that those who found themselves with MMI policies via brokers such as the Automobile Association or one of the building society block policies will come out unscathed. Those who went to the company direct are in a slightly different boat (and Which? did helpfully include a telephone number for MMI's Bournemouth office).

They had to endure a week of uncertainty about the payment of claims and may still be worried about the loss of premiums already paid, although it seems likely that the business will be taken over.

However, buying insurance is all about buying peace of mind, and MMI has not been providing that.

If you are buying a promise - which is what insurance amounts to - then the undertaking has to look copper bottomed. It is very different from a toaster or iron which can be tested to destruction in the Which? labs.

If the magazine has any doubts at all about the soundness of a company, it should simply leave it out of the list. That's a long way short of pinning a warning sign on the front door, but it would show that the duty of care to the readers who buy the good advice of Which? each month is stronger than the need to play fair by the companies until the moment the DTI steps in.

FINANCIAL advisers are bound by law - to give sound advice to their clients.

There are precious few examples of any advisers being taken to task for failing to do a decent job. But on Friday, Cannon Lincoln was fined pounds 50,000 and forced to pay substantial costs for persuading clients to cash in perfectly good savings schemes and embark on new Cannon Lincoln policies.

Investors have to be aware that a new sale generates a new commission payment, while staying with an existing scheme brings no reward.

THE FIRST dividends season since the passing of the Cheques Act in the summer is underway and more people are about to discover the downside of this legislation, designed to reduce fraud by insisting cheques are delivered to the account of the person named on the cheque.

Lesley and Roger Bolton are a good example. They have a joint holding in TSB and received a dividend cheque of pounds 13.86. But they do not have - and do not want - a joint bank account. This is a problem as the Act is strict about cheques being paid into an account of the same name.

Lesley's bank, National Westminster in Croydon, said Mr Bolton would have to present himself in person (with ID) before she could pay the cheque into her account. So she took it to the Midland to put it into her husband's First Direct account. Again, no luck, even though she was trying to give up her right to the cheque.

The ad hoc solution is to write a joint letter to one of the banks signed by both spouses, or to write to the company's registrars requesting a fresh cheque without 'account payee only' on it. But the easier long-term solution is to arrange for the cheque to be paid straight into the bank account of one of the spouses.

THE RARE, never-issued five bob note we wrote about last week has been sold for twice as much as anyone expected - pounds 12,980.

While this is the only example of a First World War note in private hands, there is a whole sheet of them in the Inland Revenue's vaults. Vincent Duggleby, the doyen of the English banknote, who has seen the sheet, says it should be worth at least pounds 500,000. There are a few other sheets of 1/- and 2/6 notes as well. The bundle should fetch pounds 1m.

Perhaps the hoard should be cashed in to boost the country's dwindling reserves.