ASK TONY: Why was hard-up son charged £51 to delay car loan payments

My son has been laid off due to the coronavirus, so he contacted Suzuki Finance to arrange a one-month payment holiday.

It agreed to this, but said it will charge him £51 for this month and for any subsequent months for which he may require a payment holiday; these fees will be added at the end of the agreement.

It seems that Suzuki Finance is making money out of this crisis.

M. S., Llanelli, Wales.

The key thing here is that these are payment holidays, not interest holidays. Although your son and others won’t pay for up to three months, the bank will still be charging interest.

Suzuki Finance is part of Lloyds Banking Group. A spokesman said: ‘There are no administration fees for payment holidays but customers will pay slightly more interest overall, as they take longer to pay back the amount borrowed.’

This hardly seems in the spirit of ‘all in this together’, because Lloyds — a bank which exists only because of a taxpayers’ bailout — will be making extra while your son is short of money.

When I made this observation to Lloyds, it said: ‘It is important to distinguish between customers who have been furloughed and those who have lost their jobs.

‘Payment holidays are designed to provide customers who are experiencing short-term and temporary financial difficulties with options to help see them through the difficult period, without impacting them significantly in the longer term — e.g. ensuring their credit file is not impacted as a result of missed payments due to reduced income.’

It further argues: ‘In terms of the accrual of interest during a payment holiday, this is not unusual. Indeed, it is standard on almost all lending products [mortgages, loans, credit cards, etc] right across the industry.’

But surely the point is that these circumstances are not normal — no more than they were in 2008 when Lloyds was saved by a multibillion-pound injection of taxpayers’ money after its inept bosses took it to the edge of oblivion.

Lloyds says it is following guidelines from regulator the Financial Conduct Authority. Basically these say that when customers are given a payment holiday, interest can still be added.

If at the end of the holiday the borrower cannot afford to repay the loan, then the extra interest should be waived. But if they can afford it, then they are liable to pay.

Whichever way you dress it up, Lloyds, and other banks that adopt this stance, are making money out of misery and financial hardship.

I have a Barclays Everyday Saver with a balance of £1,733.87, which I’ve been told has become dormant.

I have been into my local branch in Northamptonshire several times to try to withdraw my money, all to no avail.

The branch told me to call a helpline, but when I did I was told I had to close the account in branch.

The branch then told me to complete a form for lost or dormant accounts.

I have done this, but am now told it could take up to 12 weeks to get my money!

C. M., Northants.

I would like to emphasise that your attempts to get hold of your money happened well before the coronavirus crisis. 

So Barclays can’t claim it was too busy or too short-staffed to provide sensible and timely help.

The bank says that, due to inactivity on the account, it issued a letter on July 19 to make you aware of the funds it held. It said that if it did not receive a response within three months the account would be closed as dormant.

No reply was received, so the account was recorded as dormant on October 16.

The money has now been returned to you with an extra £100 for the inconvenience.

*** 

In March 1943, my grandmother invested £5 in 3.5 per cent war stock for my birthday. This was a huge gift at the time.

It remains unsigned on the line marked ‘signature of holder’ because I was only two years old! How do I cash in this bond and am I now a millionaire?

B. D., Sunderland.

While I was able to point you in the right direction to cash in your bond, you have discovered that this patriotic investment has not made you a millionaire. 

In fact, you received just £1.80 interest. Your reaction was succinct: ‘I’ve been conned!’

So, what’s the story?

The Government issued the War Loan from 1914 to pay for the costs of conflict. Unlike most government bonds, War Loan did not have an end or ‘redemption’ date.

However, the Government redeemed it on March 9, 2015, at face value partly because it was paying higher interest than newly issued debt.

Your 3.5 per cent loan has been paying 8p interest every six months. The £1.80 was back payments since 2004. 

Prior to this, is it possible the interest was going to another, now deceased, family member?

Even with this you would not have grown rich. In total, since 1947, your bond will have paid out around £11.60.

Computershare now handles War Loan. Its helpline is 0370 703 6101, or you can email [email protected] or write to British Government Stocks (Gilts), Computershare Investor Services, The Pavilions, Bridgwater Road, Bristol BS99 6ZW.

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