Wish you weren't here

 

EVERY week, Tony Hetherington replies to readers' letters, adding comments, advice and the results of his enquiries.

If you think you are a victim of financial mismanagement, or want advice before investing, write to Tony Hetherington, Financial Mail, 2 Derry Street, London W8 5TS.

Sorry, but he cannot give personal replies. Please send only copies of documents - if these are relevant to your enquiry. We regret that they cannot be returned.

WH writes: My wife and I booked with Lunn Poly to go to Ibiza in May. Three days before departure, my wife's doctor told her she could not fly because of a chest infection. We claimed on our holiday policy with Atlas Travel Insurance, but have been told to await a court case in September. The sum involved is over £700.

I wish I could give you good news, but the truth is that you have been caught up in a serious legal battle.

No fewer than 150,000 travel policies have been sold with allegedly no genuine insurance behind them. Up to 500,000 holidaymakers may be affected, most with no idea that their insurance is worthless.

The dud policies all say they are underwritten by Lloyd's of London, but Lloyd's says its members have not backed the policies since last August. Nevertheless, they remained on sale through travel agents.

Mike Monk of the Association of British Travel Agents told me: 'The policies purport to have been written by a syndicate at Lloyd's. The Management Company (London) Limited was appointed to place them with travel agents through brokers. Consumers paid in good faith for policies and travel agents issued them in good faith, passing the premiums on.

'But the Management Company seems not to have paid the syndicate and the syndicate says it never took on the risk in the first place.'

Nigel Spraggon of Central Claims Management, which handles claims for Atlas Insurance, admitted: 'It's a major mess. Atlas passed the premiums on, so as far as we are concerned the insurance should be valid.'

So if Atlas Insurance and the travel agents are not to blame, where does the fault lie?

Enquiries centre on two firms of middlemen, Lloyd's broker Morgan Read & Sharman and The Management Company (London) Ltd, which was wound up by the High Court 10 days ago, after a secret investigation by the Department of Trade and Industry.

Two court cases are scheduled on 23 July and 24 September, both aimed at deciding how many, if any, of the policies are valid. You are caught in the middle.

The whole affair shows that despite two decades of City regulation, there are still holes in the system.

Lloyd's of London is regulated by the Financial Services Authority, but Lloyd's regulates its own members.

A spokeswoman for Lloyd's said: 'We knew about the problem and reported The Management Company to the FSA, but they issued policies without our authorisation.'

But an FSA official hit back: 'We don't regulate travel insurance intermediaries, so we didn't regulate The Management Company. We regulate Lloyd's itself.'

More than one source close to the affair has told me that it took an earbashing from FSA boss Sir Howard Davies before Lloyd's accepted any responsibility.

Lloyd's has offered emergency medical cover to anyone whose policy is a dud, but will not cover claims for anything else.

Anyone who thinks their policy might be affected can call Lloyd's on 0800 917 5971 or log on its website at Lloyd's.

Grapeshot
AJB writes: When I received a mailshot from wine merchant Boington & Fredericks, I thought of you. I have no intention of dealing with them.

Many thanks for the interesting mailshot, sent to shareholders in Wiggins Group, Kingston Communications and Dana Petroleum.

Those who reply are offered 'an analysis of company prospects'. Since Boington & Fredericks is not authorised to give financial advice, either the report doesn't contain any or it has been bought in from outside.

Investors who bite will be called by someone selling wine as an investment. What it won't tell you, though, is that Boington & Fredericks is a new company whose boss, Frederick Achom, previously worked for City Vintners, boycotted by decent wine suppliers for selling overpriced wine. Boington & Fredericks is up to the same trick.

Salesmen have offered Chateau Lafite 1996 at about £4,300 a case. At a legitimate wine dealer you would pay under £2,000. More than 30 genuine dealers are now boycotting Boington & Fredericks.

Simple mathematics that everyone can understand
Mrs CAL writes: I am writing about your article of 17 June, when you described Women Empowering Women as Women Ripping Off Women. You presented this scheme as foul. It is nothing of the sort. It differs from pyramid schemes as they work by having one controlling member who gets most of the proceeds.

With Women Empowering Women, the receiver of monies changes constantly and the aim is for everyone to benefit. Most men cannot comprehend a scheme that is largely based on trust. Most of the bad Press articles are written by men. I am aware you will not publish this letter.

Yours is not the only letter I have received that suggests that as a man, I cannot understand Women Empowering Women. However, one or two writers say they believe I secretly know the scheme works, and I am part of a male conspiracy to crush it and keep women poor.

Leaving the paranoia aside, mathematics are the same for both sexes. Women Empowering Women involves handing over £3,000 in the hope that eight new recruits will eventually give you a total of £24,000.

It follows that they will need 64 recruits to pay them, and this next tier will need 512, who will need 4,096 - and so on. For every winner, there must be eight losers.

If you don't believe me, visit the Isle of Wight, where the scheme started in the UK. Some women there are in despair after borrowing £3,000 on their credit cards to take part.

Or read the warning article that appeared on June 28 in The Mail on Sunday's sister paper, the London Evening Standard. Reporting that some women in the scheme are now suing each other, Emily Sheffield revealed that one lady is even taking her own bridesmaid to court. And Emily Sheffield is not a man.

Crossed wires at BT
EDM writes: BT offered to change my landline tariff and give me a free mobile phone. I agreed to the tariff change, but declined the phone. A few days later Securicor rang to say it had a parcel for me from BT Cellnet. The company confirmed it was a mobile phone, so I told them to send it back. Cellnet confirms that the phone was returned, but I have had bills for £56 and £51, and threatening letters from debt collectors.

Not only did BT Cellnet send you a mobile phone you didn't want, but it registered you as having two phone accounts. BT told me that when the phone was returned, invoices for one account were scrapped, but the second carried on notching up rental bills.

I am assured that the second account has now been closed and all invoices cancelled. By the time you read this, you should have received a cheque for £20 from BT to cover your calls and letters to them.

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