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Pension Victims Do Deserve a Little Credit Too ; LAST WORD

May 22, 2007

By TONY HAZELL

THIS Government has consistently argued that it cannot afford the full cost of compensating victims of the pension windup scandal. But it seems that affordability is a relative thing.

The gap between what is being offered and what is needed to provide full compensation is around Pounds 600 million. Yet we now learn that the Prime Minister-in-waiting, Gordon Brown, is set to write off Pounds 5billion wrongly paid out in tax credits over the past four years.

I have every sympathy with many of those at the wrong end of this tax credits fiasco. Though some of the money has undoubtedly been fraudulently obtained, many others have not understood that they were being overpaid - which is hardly surprising, given the mindwrenching complexity of the scheme.

Others have questioned their payments or tried to repay them, but have been thwarted by the awful administration.

But I have even more sympathy for the victims of pension windups who have also been scuppered by government maladministration and in most cases have far more money at stake. To remind you, they saved their own money into company pension schemes which the Government assured them were safe.

They took responsibility for their own lives and their own futures, but were kicked in the teeth when their companies reneged on promises while the Government stood by and watched.

But though the Government has backed down over the tax credit issue in double-quick time, it has prevaricated, stalled and misled at every turn when it has come to compensating those who lost their pensions.

At the Budget, the victims were promised Pounds 8 billion, but this turned out to be just Pounds 1.9 billion in today's money - and that will be paid over 50 years.

So in a nutshell, the same Government that has handed out Pounds 5 billion through the incompetence of its own civil servants in four years claims it cannot now find an extra Pounds 600 million for pension windup victims.

The lesson here is simple. If you show independence and make the effort to save, few at Westminster will care if your savings are stolen. But if you sit back and take any free money the Government throws at you, you get to keep it whether you are due it or not.

It's a sick set of values, but that is the world we now live in after ten years of Labour government.

THE insurance industry appears to respond to scientific data when it can boost its profits - but not when there could be reduced premiums for customers.

Hence, many cancers are now excluded from critical illness policies because they are seen as curable, yet individuals who have recovered from those same cancers can find their travel insurance premiums doubled or tripled and can even be refused cover. Charging extra for certain conditions is perfectly understandable. Someone with heart disease could collapse on holiday and need urgent hospital treatment. A chronic back pain sufferer could seize up.

But do the number-crunchers who set insurance premiums really believe that someone who has fully recovered from cancer is going to suffer a setback serious enough to demand hospitalisation or immediate return in the space of a seven-day holiday? That is what their premiums imply.

This is nothing short of profiteering, and their refusal to address it tarnishes the reputation of the giants of the insurance industry.

THE Financial Ombudsman is receiving up to 3,000 inquiries a day on bank charges and this issue threatens to dwarf all others. Actual complaints about bank charges are now running at around 1,000 a week, says its annual report, still leaving it in second place to mortgage endowments, where complaints are starting to tail off after peaking at nearly 70,000 a year. The Ombudsman's report is an excellent barometer both of what is galling us and how the financial industry is behaving.

Two issues stand out. Banks are still backing off whenever customers complain to the Ombudsman about charges. So far it has not been able to adjudicate on a single case because the banks pay up before cases get that far. This suggests that using the Ombudsman for bank charges complaints is a better option than the courts - it's also cheaper because the service is free to consumers.

Some banks have been reluctant to tell customers they can use the Ombudsman in disputes over charges. But if your bank fails to come to an arrangement within eight weeks, you can go straight to the Ombudsman without worrying about any other steps.

The second issue is rather more intriguing. This concerns mainly middleclass parents who seek to cut the cost of their children's car insurance by insuring the car themselves and putting their child on as a named driver. This is fine if you really are the main driver.

But there has been a sharp increase in cases where the child is the actual main driver; often the parent has another car insured with the same company.

Data sharing will also make it easier to uncover cases where the parent insures two cars with separate companies. When an accident happens, the insurer refuses to pay up and the Ombudsman, quite correctly, backs them.

Beware if you're tempted to use this route to cut costs. Not only is your child not insured - but the company could choose to pursue a fraud case against you (though the Ombudsman is not yet aware of this happening).

t.hazell@dailymail.co.uk

(c) 2007 Daily Mail; London (UK). Provided by ProQuest Information and Learning. All rights Reserved.



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