Capital letters

Don't be bullied into paying this 'delinquent' debt

I got a letter from a debt collecting agency referring to a £1,599 student overdraft I had with Barclays Bank 10 years ago. I had an account with this bank when I was a student, but then moved my current account to Abbey.

I signed the overdraft and direct debit transfer forms. It is hard to remember from 1998, but probably the £1,599 was not moved over. Can the bank still chase me?MB, Leeds

Your letter did not come from Barclays Bank, but from Lowell Financial - a firm which buys up "delinquent" debts which the banks have given up on and then tries to recover the money. Lowell recently won the accolade of "debt purchaser of the year" from fellow debt collectors.

In your case, Barclays gave up on the £1,599 as it had passed the six-year limitation period during which it can chase payment. This period runs from the last time the bank contacted you and when you last "acknowledged" the debt. In your case, no contact was made so the bank could do nothing after the six years expired in 2004.

However, there is a little-known market in expired and statute-limited debt and Lowell, among other firms, pays around 0.5p for each £1 of money owed - your overdraft cost the collectors about £8, although Lowell would have bought many such debts in a package from Barclays.

Lowell, which expects £20m in profits this year, hopes phrases such as "we may instruct an agent to visit your home to discuss repayment of your account" will persuade you to pay some or all of the £1,599, either as a lump sum or as a regular repayment plan. If you do, its small investment will pay off handsomely.

But payment is voluntary. You cannot be taken to court or suffer a damaged credit record if you decline.

The best course is to ignore this letter. Should you wish to repay the debt, send the money to a charity, not Lowell.

Dispute over damaged sofa doesn't sit well

Last August I ordered a £940 sofa from Marks & Spencer, chosen for its special stain-resistant finish.

The sofa was delivered in October. By Christmas, I noticed discolouring. I contacted the store, which sent a technician from the Furniture Industry Research Association (Fira).

The Fira inspector acknowledged the discolouring and said the sofa should either be replaced or refunded.

But the Fira report to M&S later in January said "there was no evidence of a fault with your furniture and it does meet the correct specifications".

How can the two both be correct?MF, Liverpool

One version must be wrong, so you appealed to the Furniture Ombudsman, the industry's disputes resolution service which shares an address with Fira, in early February.

You heard nothing until four weeks ago when the ombudsman rejected your complaint, blaming the marks (which were on various parts of the sofa, including the arms) on the possibility that you, or others in your home, had sat on the furniture wearing denim.

But there was no specific warning against blue jeans on the M&S label. And you believed you had bought a stain-resistant finish.

Had you wished to challenge the ombudsman, you would have had to pay £50 - refundable if your complaint was upheld.

Capital Letters told M&S of the wide discrepancy between the initial report from the home visit and the letter from Fira, and of the five-month delay in getting a reply from the ombudsman.

M&S was quick to reply, citing the apparently large discrepancy between what you were told and the filed report. "We are looking into why this occurred with urgency but in the meantime are contacting your reader to arrange for a replacement and apologise for any inconvenience caused."

We couldn't bank on Barclays to help

Among my deceased grandmother's belongings we found a Woolwich Building Society savings account book with a £1,768 balance. My mother, a signatory on the account, went to Barclays, which took over Woolwich, with the death certificate.

Some weeks later Barclays replied that as the account hadn't been used in the past 10 years, and as its archived details only record the past six years, they were unable to confirm the validity of the account. So we are left in limbo as to whether the money exists.

Can you help?PK, Essex

You wanted closure. You needed to know if this money existed, if the passbook was simply old or a duplicate, or even if the account had been superseded by another type.

Barclays was not helpful. Instead of aiding you, it said nothing could be done, giving you the impression the bank had pocketed the cash.

Once Capital Letters intervened, the bank swiftly found the account had been closed in the 1990s and your late grandmother had withdrawn the cash.

Barclays agrees the matter should have been better handled. It will write to apologise, and send a goodwill gesture as you and your mother suffered added distress on top of your grieving.

Viral epidemic is nothing but a con

In January I was persuaded by Legacy International to invest £10,522 in the shares of Viral Solutions. Legacy told me I would be buying ahead of Viral's UK stock market float in June. But since the purchase, there has been no news. Is this a hoax?DM, London

It is a hoax but those laughing are the ones behind Legacy, which operates from a Grenada phone number, though its "newsletter" suggests it is domiciled in Belize (where the authorities have issued a warning against it).

Legacy is a boiler room and you are not the only one to fall for this. It seems Legacy always suggests the Viral flotation is imminent and, as it has been selling Viral shares since spring 2007, there have been a lot of missed dates. Viral has a website which promises herbal cures for malaria and the mosquito-borne dengue fever, and makes extravagant claims about HIV and hepatitis C therapies - which seem to have escaped the attention of the world's leading drug companies. Viral shares have no substantive value and a flotation remains unlikely.

Update: Hastings Direct

In August 2007, Capital Letters revealed how a Middlesex reader had his Hastings Direct motor policy cancelled less than 48 hours before cover was due to start because the company had underpriced policies due to a computer error.

At the time Hastings said it had "sought advice from the Financial Services Authority and the Financial Ombudsman Service. Both were satisfied our (£30) compensation offer was adequate". The FOS said it was "misleading" to say such guidance existed.

This week, the FSA fined Hastings £735,000 (reduced from £1.05m for owning up) for not treating 4,550 customers fairly. The FSA found "the way in which the policies were cancelled showed the firm focused on the financial cost to itself and did not properly consider the alternatives or the detrimental effect on customers". Hastings has agreed to write to all customers and to review compensation offered.