Margaret Dibben writes your wrongs

They said dad was too ill to get a loan. So they gave it to mum

In April 2007, my parents took out an unsecured personal loan for £10,000 with Lloyds TSB to buy a car. My father was 64 and on disability benefit, having been unable to work for several years with numerous medical problems. The bank knew this and would not lend to him on his own, nor sell him payment protection insurance as, presumably, it calculated that the risk of him dying before the loan was repaid was statistically high.

So Lloyds granted a loan with my retired mother as the first-named account holder. Sadly, my father died suddenly at the end of October. My mother and I are trudging through the paperwork. Her only savings are £3,000.

We visited our Lloyds' branch and the staff advised mum to take a one-month repayment holiday. She will repay this as an extra month with an extra £88 interest. The bank engineered the loan believing my father to be a bad risk but, now that he has proved them right, what about mum? We are trying to sell the car to pay the bank off but, in the current climate, this is difficult.

Mum wants to repay the loan but is very worried because she simply cannot afford to pay so much each month.

AM, Cirencester

The branch staff probably went as far as they could without referring your mother's problem higher up. Last week the government promised to give the Banking Code more bite - it already says banks must help all customers who hit hard times. Your mother's case is just such an example. She faces repaying a loan for years after being forced to sell the car that she had borrowed the money to buy.

Now, at a senior level, Lloyds has responded and appreciates that your mother is a longstanding customer with an excellent credit record. It has rescheduled her loan over a much longer period and slashed the rate of interest so her repayments will be almost £100 a month lower and she can afford to keep the car.

This would have been one of the rare occasions when buying payment protection insurance (PPI) would have been a good idea. But someone more likely than most to need it was not allowed to have it.

Will Direct Line help me sue its sister bank, NatWest?

I have Direct Line contents and buildings insurance including legal protection. I contacted Direct Line about a potential need for legal advice regarding a dispute I have with NatWest but was told that, as NatWest and Direct Line are both part of Royal Bank of Scotland, there would be a conflict of interest. The adviser offered £180 to pay for a solicitor of my choice but I should be covered for £100,000 of legal fees under the policy. Can they deny me this cover?

AW, Wilsden, West Yorkshire

This conflict of interest affects every company in the RBS group including Churchill, Privilege, Coutts, Tesco Personal Finance and Green Flag. Direct Line reimburses the cost of speaking to an independent solicitor up to £180, which should cover almost two hours' consultation. If the solicitor agrees you have a valid claim, Direct Line will then pay for up to £100,000 worth of fees. So you do still have access to this cover. Finding a separate solicitor is inconvenient but it does mean you cannot blame Direct Line for refusing a claim against a sister company. And a refusal looks the most likely outcome: the legal expenses clause in your policy excludes disputes about financial services - mortgages, loans, bank accounts, credit cards - because they are not regarded as goods or services. This was not mentioned in the letter you received about using an outside solicitor, but it does stop your claim in its tracks.

I thought I'd been exempted from my student loan, but ...

I am a science teacher on the Repayment of Teachers' Loans (RTL) scheme [which exempts teachers from repayment of their student loans for the period of their teaching career]. In 2006 I deferred the loan to take a year off and travel. While I was away, the Student Loans Company [SLC] started demanding payment. Over the past 15 months, I have had numerous telephone conversations with SLC and written many letters. Eventually they agreed to defer the loan. I was put back on the RTL scheme when I returned to teaching but ever since have had letters constantly telling me I am in arrears. The SLC has taken money out of my salary six times in the past year. They refunded it twice when I complained but it has still been taken four more times. I have received another letter, for which I am being charged £20, threatening me with debt collectors, even though they are taking money out of my salary. I keep getting told someone will get back to me, but no one ever does.

JC, Fareham

The RTL scheme does not meet the loan repayments due while you are taking time out from teaching, unless you are taking that time for childcare. You can defer payments, but must start paying for the deferred year when you return to teaching. But RTL admits that money has been wrongly deducted from your salary and blames a system fault. Once you send in copies of your payslips, the money will be refunded in full.

I overpaid my credit card bill - by £1,100

I accidentally overpaid my Citibank credit card by £1,100 in July, which was my mistake. Since then I have been trying to recover the money. I am always informed that a cheque has been raised and I should be patient. My patience has worn thin.

GD'S, Hampton

Citibank took some chasing but finally someone found that a cheque had been issued, probably two months after you told them you had overpaid. The bank now accepts you did not receive it. It reissued the cheque, saying it would take seven to 10 days. A fortnight later, nothing had arrived. You then found that your postman had been delivering the cheques to a neighbour a few houses away, and that the neighbour had been on holiday. Citibank confirmed that the second cheque had not been cancelled and you have now cashed it.
