SALLY SORTS IT: £1,132 refund for Covid-hit choir tour has disappeared

I am Vice President of the Pelenna Valley Male Voice Choir. In July 2019 the choir decided to do a small tour of Germany the following year so I paid British Airways (BA) an initial deposit of £1,000 and then a further £132.

Although it was a group booking, I paid with my personal HSBC debit card. Covid postponed the trip twice so in January BA agreed to refund the deposit.

The problem is that BA only refunded the money to the original account, but I closed it in 2021. I had a terrible time trying to get the money back. Can you please help?

DM, Neath, South Wales.

Sally Hamilton replies: Despite singing at the top of your lungs about your repayment problem, your pleas fell on deaf ears at BA.

Your problem started because HSBC closed your local branch. This led to you closing your account there, meaning the promised £1,000 BA refund had nowhere to go.

But account closures are not uncommon, and processes exist to protect customers who have made refunds to defunct accounts.

Typically, the money must be returned to the retailer issuing the refund, who must then arrange for the customer to be paid in an alternative manner. You tried to warn BA that the money couldn’t go to your old account.

The airline said not to worry as it would bounce back. Although you were hesitant to embark on what seemed like a pointless process, you felt you had no other choice.

Despite BA’s reassurances, the refund didn’t come and you kept running in circles trying to get it back. To your anger, BA told you in March that there was no record of the money being returned. It then suggested chasing HSBC itself.

You reluctantly contacted HSBC. But since you didn’t have the necessary security number, it didn’t want to discuss the matter.

By this time, it had been more than three months since the saga began. You went back to BA. Again, it told you to contact the bank.

HSBC wrote to you to call to obtain the security number. You did this, but you failed to get through phone security because you couldn’t answer questions about the closed account.

A moderator agreed to send the security number by mail. But the letter again asked you to call to get the number – and again security failed. Fed up, you called an HSBC branch in Merthyr Tydfil, only to be told it was BA’s problem, not theirs.

On April 24, you asked BA to run a payment tracking with its finance department. It promised to contact you, but didn’t.

Four days later you tried again. This time you received an ‘acquirer reference number’ (ARN), a unique number that is assigned to all payment transactions. BA suggested that this be passed on to HSBC.

You felt that you were finally getting somewhere. After making a special trip to HSBC’s Neath branch using your passport as identification, you finally received the security number.

You called HSBC and were told it would not investigate because all payments to defunct accounts are automatically bounced back. It wouldn’t even look at the ARN.

The nightmare continued when you called BA on June 12th. It promised to sort things out and call you. This never happened.

This is when you came to me.

I was stunned that what should have been a simple transaction turned out to be so painful, and immediately intervened. A few days later, the refund has been deposited securely in your new bank account.

No explanation has been given by BA why this could not have happened at the start.

Nevertheless, you were grateful for my help and told me that you intended to distribute the money quickly to your fellow choristers.

LV reduced the value of my life insurance policy by £6,000

I am writing to you about a life insurance policy in LiverpoolVictoria (LV) which I took out in 1990 and paid for 30 years.

After completing the payments in March 2021 I received a letter stating that if I cashed in the policy I would be paid £11,459 and if the policy remained in force this amount would be paid on my death.

In May 2022, a letter confirmed the same amounts. But when I called in May this year I was told the amount had dropped to just over £5,000.

How is it possible for the value to drop by £6,000 in a year? It’s like a legal robbery.

KW, Birmingham.

Sally Hamilton replies: Lifetime policies are a type of life insurance policy designed to pay a sum of money to loved ones upon the policyholder’s death.

They also have a “surrender value” that is paid to you if you decide to cash in while you are still alive.

The premiums you have paid over 30 years have gone into a mutual fund, part of the profits of which have been distributed to all policyholders.

This type of product is designed to smooth out the ups and downs of the stock market. LV and others do this by withholding a portion of profits in good years to increase returns in tougher times.

The benefit depends on the premium paid over the set period and consists of a guaranteed amount, any accrued annual allowances plus a non-guaranteed final allowance. You were rightly annoyed when the surrender value of LV was less than half of the amount stated earlier.

You wondered whether this was due to declining investment results in the past year. The stock market was rocky, but not that rocky. In any case, the smoothing effect is intended to protect policyholders against this.

The explanation for the falling surrender value is the insurer’s decision to change the policy conditions.

I was horrified and demanded that LV explain himself.

His reaction was astounding. It said last year’s policies like yours were “subject to methodological adjustment to ensure overall fairness for all lifetime policyholders while still providing a reasonable return on premiums paid.”

What the heck is a methodological adjustment? An LV spokesperson explained: ‘Payouts are now set using an approach that better reflects the characteristics of each individual policy rather than the previous method of grouping many policies with different entry ages.

“As a result, some customers will see their payouts increase, but others will see their payouts decrease.”

I don’t feel much relieved. LV says the amount that would be paid if you die is now higher than the surrender value – £7,108 versus £5,468. Yet that is still far less than the promised death benefit of £11,459 in 2021 and 2023.

LV’s defense is that this style of plan was designed as a life insurance policy – not a savings product – and it said that despite the drop in value, your plan had ‘still performed well and reflects the premiums paid’, a total of £2,418.

I’m skeptical as the savings element would have been a selling point when you signed up.

James Daley of Fairer Finance, a consumer champion website, is concerned about a company changing the rules after a customer buys a policy.

He says: ‘It’s one thing to adapt the methodology for new customers, but if there was a problem with the original methodology, the insurer would have to bear the costs.

“The old methodology may have been harsh for some and the change corrects that. But it should not be at the expense of customers who want to make a better deal.’

You only found out about the lower amounts when you requested an appraisal. I asked LV how it informed policyholders about the dramatic change.

The spokesperson says: ‘We are sharing full policy values ​​through our policyholder’s annual statement and we have notified all customers who requested a valuation in the two months prior to the adjustment.’

Your wife, who had a similar policy that expired a year earlier than yours, cashed it in before the changes and received £10,000.

You have submitted your case to the Financial Ombudsman. I look forward to hearing what it says about LV changing terms mid-policy.

• Write to Sally Hamilton of Sally Sorts It, Money Mail, Northcliffe House, 2 Derry Street, London W8 5TT or email sally@dailymail.co.uk — include phone number, address and a note addressed to the offending organization giving them permission to talk to Sally Hamilton. Please do not send any original documents, we cannot take any responsibility for that. The Daily Mail assumes no legal liability for answers provided.