Insurance

Lloyds insists branch sales on track after posting £3.3bn loss

Bank's £3.2bn provision for compensating customers missold payment protection insurance hit bottom line

Lloyds Banking Group insisted on Thursday it had "credible" bidders for the 632 branches it has up for sale as it confirmed that a £3.2bn provision for compensating customers who were missold payment protection insurance drove the bank into the red the first half.

As the loss of £3.3bn was announced, chief executive Antonio Horta-Osorio, who took the helm on 1 March, said Lloyds remained in talks with the independent commission on banking (ICB) to try to avoid being forced to sell even more branches when the final report by the commission is published on 12 September.

"We have had a good and engaging process with [the ICB]," said Horta-Osorio, whose bank is 41% owned by the taxpayer. "It is a useful and productive dialogue."

The costs associated with the branch sale, which has been demanded by the EU in return for £20bn of state aid, were £47m in the first half. The sale comprises about 4.6% of the UK current account market although the ICB, chaired by Sir John Vickers, has indicated even more branches could be sold to bolster competition on the high street. Lloyds is the dominating force since its rescue takeover of HBOS during the 2008 banking crisis.

Horta-Osorio, who has code-named the disposal programme Verde, insisted the 632 branch sales would be enough to bolster competition as the operation is same size of the Halifax business it bought during the crisis. "The Verde business will have strong brands, a branch network of a similar size to that of the Halifax and a full product range including savings, loans, credit cards and mortgages as well as current accounts. We believe that Verde will be a strong competitor in UK retail banking," he said.

He hopes to find a buyer by the end of the year but has not ruled out flotation if a buyer cannot be found. He said bidders could ask for the number of mortgages that are being included in the sale to change to make it easier to complete a sale.

The City has been concerned that National Australia Bank, regarded as the most credible bidder, does not appear to have submitted an indicative offer and neither has Virgin Money.

In the red, as expected

Horta-Osorio announced 15,000 job cuts in June when he used a strategy day to pledge an extra £1.5bn of annual savings in 2014, on top of £2bn of savings achieved through integration.

The bank will have to spend £2.3bn to achieve the cost cuts, which include pulling out of half of the 30 countries where Lloyds has operations by 2014.

The loss of £3.3bn was expected by the City because of the previously announced £3.2bn provision for PPI.

With that stripped out, and using the "combined business basis" of accounting, the bank has been using since the HBOS deal, the profits were £1.1bn, down on the £1.6bn of profit announced a year ago when the bank had heralded a return to the black.

It is prohibited from paying dividends by the EU until next year. The shares were up 1.5% in early trading at 40p but quickly reversed early gains to slump 7% and become one the largest fallers in the FTSE 100 by 9am.

The figures showed a 17% fall in the impairment charge to £5.4bn even though there was a deterioration in its loans in Ireland. The impairment charge was higher than analysts had been expecting and the bank warned there was "material downside risks" to the size of the charge.

"These include, in the UK, fragile consumer and business confidence, potential interest rate and inflation rises and reduced consumer spending. A 'double-dip' scenario – a second, shallower recession following closely the one from which the economy is just emerging – also remains a downside risk," the bank said.

Some 64.1% of the Irish portfolio is now impaired, meaning the borrower has missed at least one repayment, after a further 11% of the £27.6bn loan book became impaired. The impairment charge for Ireland pushed the international business to report a £2.1bn loss.

Horta-Osorio admitted he was continuing to "closely monitor and control our exposures" to certain European countries. The direct exposure to national and local governments of Spain, Italy, Portugal, Ireland, Greece and Belgium was £189m.

However, he stressed that the tensions in the money markets should not affect the bank's own funding needs as it weens itself off the government support that has kept it afloat since the crisis. In the first half, £75bn of government funding was replaced, leaving only £37bn of government support left to refinance.

Lloyds Banking GroupBankingEuropean debt crisisEuropean banksGlobal economyEconomicsPayment protection insuranceInsuranceJill Treanorguardian.co.uk

Earthquakes and political tremors make this year insurers’ most expensive ever

• Hiscox reports £85.6m first-half loss
• Catastrophes in 2011 cost industry more than £30bn
• Japan, Australia and New Zealand see premiums soar

A series of natural disasters, including the Japanese earthquake, combined with the political unrest in the Middle East have made 2011 the costliest year ever for the insurance industry, Hiscox has warned.

The Lloyd's of London insurer slipped into the red with a first-half loss before tax of £85.6m, compared with a profit of £97.2m a year ago. The only bright spot was its UK retail business, which provides household and luxury car insurance to wealthy people as well as commercial cover, and made a record profit of £25.2m.

After just six months, 2011 is already the most expensive catastrophe year for the insurance industry on record – worse than the full 12 months of 2005, the previous highest on record. The devastating earthquake and tsunami in Japan, combined with the quake in New Zealand, floods in Australia and tornadoes in the eastern US inflicted losses of more than $50bn (£30.6bn) on the industry.

Chairman Robert Hiscox said: "It has been an exceptionally challenging first half-year, but we are in good shape to take advantage of increased rates in some catastrophe areas, and to accelerate the momentum of our retail businesses."

US catastrophe reinsurance rates have gone up by 10%, on average, while premiums in loss-affected areas such as Japan, Australia and New Zealand have seen much bigger increases, some in excess of 50%.

Bronislaw Masojada, Hiscox's chief executive, explained that "feast follows famine" in the insurance industry. As insurance rates go up, 2012 promises to be a much better year. Depending on the hurricane season, Hiscox could still make a small profit this year.

"We believe it is well-positioned to benefit from areas where rating is stronger which has been partially shown by a 20% increase in business written in May/June in its London market reinsurance book," said Peel Hunt analyst Sarah Lewandowski.

The company's European business managed to break even in the first half, despite some large losses. It was hit by the theft of two paintings from a Dutch museum – its biggest fine art loss in 10 years, although the paintings could resurface as they cannot be sold on the open market – as well as a large kidnap claim and a technology loss.

To offset losses from natural disasters, Hiscox has been beefing up its retail operations, which now make up 45% of business, compared with 25% a few years ago. The figure could reach 50% this year.

With climate change increasing the risk of flooding and natural disasters, Masojada warned consumers and businesses could see insurance premiums go up in coming years. "We observe what happens rather than trying to predict what happens and we adjust the pricing every 12 months. We are very aware that climate risk is driving volatility and ultimately prices could go up in loss affected areas." He noted that people are increasingly moving into risky coastal areas, particularly in the US.

HiscoxInsurance industryLloyd'sInsuranceJulia Kolleweguardian.co.uk

Bupa accuses surgeons of performing unnecessary knee operations

Doctors deny private health insurer's claim that many knee arthroscopies performed on Bupa patients are unnecessary

Britain's largest private health insurer is embroiled in a severe row with some of the country's top surgeons after accusing them of performing operations that earn them £600 a time on patients without a good medical reason.

Bupa, which insures 3 million Britons, claims orthopaedic surgeons have carried out unnecessary knee arthroscopies on some of their clients.

The company alleges that unnamed specialist surgeons have defied standard clinical practice and official advice by subjecting some patients to the procedure.

Bupa members are more than twice as likely as NHS patients to have the operation, while some surgeons are three times more likely than others to recommend that patients they examine undergo it, the firm claims.

But surgeons' leaders have responded by alleging that Bupa is damaging their reputations with an unjustified "slur", undermining patients' trust in their doctor, and trying to save money by denying people in pain an operation needed to restore their quality of life.

Dr Annabel Bentley, the medical director of Bupa's UK health and wellbeing division, has sparked a major dispute by drawing attention to what she says are big differences in NHS and private patients' chances of having the operation.

In a letter to the British Orthopaedic Association (BOA), which represents surgeons who perform joint operations, she wrote: "We have concerns about current clinical practice in knee arthroscopy because the rate of surgery performed on our insured members is substantially higher than the NHS rate. We have also identified specific cases among Bupa members by some consultants where treatment does not appear to be in line with published evidence-based guidelines."

Speaking to the Guardian, Bentley claimed: "We found the rate of knee arthroscopy in our members is more than double the rate in NHS patients [and that] some surgeons are three times more likely than others to perform a knee arthroscopy on our members."

While some variation may be due to clinical reasons, these big differences in treatment rates are unexplained, she added.

Surgeons' organisations have criticised Bentley for making such claims without referring doctors Bupa believes are over-operating to the General Medical Council for misconduct, or publishing the evidence it says it has of the unjustifiably wide variation.

The BOA, British Association for Surgery of the Knee (Bask) and the Federation of Independent Practitioner Organisations (Fipo) are opposed to a new pre-surgery check Bupa has introduced in a bid to reduce unnecessary knee arthroscopies.

Bupa wants all surgeons to fill in a form giving details of the clinical indications for surgery before it approves payment.

In a letter to the Bupa's board, the three organisations voiced "concern at what we believe is a threat to clinical governance, patient care and consultant independence" because "this new approval process for surgery involves non-medical Bupa staff checking a surgeon's decision against undisclosed guidelines".

The BOA has urged the 4,000 surgeons it represents to boycott the forms, which, it says, undermine surgeons' clinical judgment.

While some are completing them, others are refusing to do so, and some are being threatened with what the BOA's president, Peter Kay, describes as "blacklisting" – no longer being allowed to treat Bupa patients.

The letter calls Bupa's actions "indefensible". It says: "At the heart of what is presented to us as a funding or cost control measure it is alleged by the doctors in the Bupa health and wellbeing division that some surgeons are carrying out inappropriate surgery. However, no specific evidence of this has been provided."

It also says Bupa subscribers will cancel their policies if they are denied the chance to use the surgeon who examined them.

Bentley denied Bupa's move was intended to save money. "We want to ensure we pay for best practice, not poor practice," she said.

Health insurers are under pressure as the number of policyholders has dropped sharply in the past two years as a result of the financial squeeze.

Fergus Craig, the commercial director of AXA PPP, another big health insurer, indicated recently that it believes some surgeons are over-treating for personal gain.

He said: "The rate of intervention in some areas [of medical practice] is higher than it is in others. This concerns me. There is a clear incentive for consultants to do things that may be of marginal medical benefit and significant benefit in terms of bolstering their income."

Bentley said "it's a possibility" that some surgeons are performing unnecessary operations. The big difference in treatment rates may be due to some under-treating but others over-treating, she said.

She said she did not know if individual surgeons were doing too many operations in order to make money, but "had a duty to act when we see this issue, and we see this issue with knee arthroscopy".

Bask's president, Tim Wilton, said patients denied their choice of specialist knee surgeon were being offered alternative surgeons with expertise in back, shoulder or feet operations, a development which could affect patients' welfare.

But Bentley added that Bupa was simply repeating an exercise it did several years ago when, on examining high rates of hysterectomy among its patients, it found some women were having a healthy womb removed by surgeons.

Patient who paid

Alison Twigley, a consultant anaesthetist, was denied her chosen surgeon for a knee operation in June when Bupa refused to fund it because he refused to fill in a form that surgeons claim undermines their clinical judgment. She still used the surgeon but paid for the operation herself.

"I hurt my left knee last December after dragging a heavy new table around when I had a new kitchen put in. Bupa paid for an MRI scan, which showed that I'd torn my cartilage.

"My knee swelled up due to fluid on it. It was fairly stiff, I had some pain and I couldn't flex it much. I went on a skiing holiday but couldn't ski or do much physical exercise to keep fit as I usually do.

"I was very reluctant to have an operation. I wanted to see if the knee would mend on its own. But Prof Tim Briggs, one of the country's leading orthopaedic surgeons, told me it would probably need something doing to it surgically.

"In April I agreed to have an arthroscopy and have the cartilage trimmed as the knee was obviously getting no better.

"But in late May the Spire hospital in Bushey in Hertfordshire where I was due to have the operation on 17 June contacted me to say there was a problem with my Bupa insurance.

"Bupa told me it couldn't fund the operation because Prof Briggs hadn't signed their its special new form giving the grounds for the arthroscopy. I challenged them but they were adamant.

"Prof Briggs told me he hadn't signed it because it was undermining his professional judgment.

"He said: 'Why should an insurance company decide whether a patient had or didn't have an arthroscopy?'

"I agreed with him. It's wrong for insurance company employees to judge whether a consultant orthopaedic surgeon should be doing one operation or another because they won't have the clinical judgment. They must be trying to save money.

"When I spoke to Bupa it said: 'There's no reason to have it done with Prof Briggs. We'll give you the name of a surgeon who is happy to sign the form.'

"That really incensed me. I said I wanted a surgeon I trusted and knew would do a good job. I ended up paying for the operation myself.

"I thought Bupa's action was breach of contract. What's the point of being insured with somebody if when you need something done it won't pay for it?

"I was paying them it £127 a month. But I've now cancelled my policy, so I will get the cost of the operation back that way."

Briggs confirmed that Twigley had wanted to see him and only him.

"I refused to sign the Bupa form as a matter of principle," he said. "Bupa's new policy is limiting people's choice of surgeon because a lot of consultants are refusing to sign these forms."

HealthNHSHealth insuranceInsuranceHealthcare industryDenis Campbellguardian.co.uk

Contents insurance can’t be mandatory, surely?

Endsleigh asked to arrange my contents cover when I move and made it sound like something my letting agent insists on

My husband and I are moving house so, as usual, the letting agents did reference checks, and the company they used was Endsleigh. Since then, both my husband and I have been sent numerous emails, calls and texts from Endsleigh saying "your letting agents have asked us to contact you to sort out your contents insurance".

They rang today and said "your letting agents [or it might have been landlord, I can't quite remember] have asked us to contact you to arrange your contents insurance for your move to Tooting".

I said I was quite capable of arranging my own insurance, thanks. "But your agents have asked us to arrange this for you." I repeated: "No thanks." "We'll go back to them and tell them that, then."

I'm no expert, but this sounds like mis-selling to me as the implication is that I'm obliged to purchase contents insurance off Endsleigh.

In our contract there is no obligation to purchase contents insurance, let alone specifically from Endsleigh – but such was the implication in the calls/texts that I had to physically check our contract to make sure.

I'm fairly sure, were I not quite so savvy on marketing, I'd have just assumed it was part of my contract and let them flog it to me. It this standard practice? CB, Tooting, London

Endsleigh said it was happy to clarify why it approached you, reiterating that it works in partnership with your letting agent, Samuel Estates.

In the tenant reference form that you filled out for Endsleigh, there was a consent box asking whether Endsleigh should contact you regarding contents insurance. A spokesman said he had checked your form, and you had given permission for the firm to get in touch.

The spokesman continued: "I can see that CB was then sent a text message, giving advance notice that Endsleigh would be calling her – or giving her the option to ring us should she wish to set up contents insurance more urgently. We also sent her an email, explaining our partnership with her letting agent and the reason for getting in touch.

"CB subsequently had a telephone conversation with Endsleigh, in which she made clear that she was not interested in our contents insurance cover.

"I would like to assure her that all our telephone sales representatives are given scripts to follow, to ensure compliance with regulatory guidelines, and I am satisfied that our representative acted properly. As she did not express any interest in our product, it was flagged that we should not contact her again regarding it."

You remain unhappy with this response because it does not address your concern, which is that Endsleigh implied your landlord/letting agent had asked it to arrange this insurance. This seemed to imply that taking it out was in some way mandatory.

We sought clarification from Endsleigh. A spokesman said the firm disagreed with CB and it was clear its service was merely an offer.

We welcome letters but cannot answer individually. Email us at consumer.champions@guardian.co.uk or write to Brignall & King, Money, the Guardian, 90 York Way, London N1 9GU. Please include a daytime phone number.

Home insurancePropertyInsuranceRenting propertyConsumer affairsConsumer rightsMark Kingguardian.co.uk

Insurance fraud levels soar

Report says fraudulent claims cost insurance industry about £2bn a year and reveals outrageous cases of cheating

Insurers uncovered 133,000 fraudulent insurance claims worth £919m in 2010, meaning the public registered 2,500 fake claims every week – a rise of 9% on 2009, according to figures from the Association of British Insurers. It said the number and value of detected insurance frauds had risen by more than 100% over the past five years.

Fraudulent claims cost the insurance industry an estimated £2bn a year, adding an average £44 a year to the insurance bill for every UK policyholder. The scale of the problem has provoked insurers to set up an insurance fraud register early next year, which will contain details of insurance cheats.

The most common frauds involved home insurance with 66,000 bogus or exaggerated claims discovered by insurers, followed by 40,000 dishonest motor insurance claims. Motor frauds were the most costly, totalling £466m.

The ABI said one claim for back injuries sustained from a fall while working in a nightclub was rejected when Facebook images showed the claimant performing gymnastics and training for a charity run.

A woman's claim for facial injuries she said resulted from a falling toilet roll holder in a fast food outlet was rejected when it was shown that the holder would have had to have fallen upwards to cause the injury.

A claim for injury said to be caused by falling over a wall was rejected when it was proved that there was no wall at the scene of the alleged incident.

Nick Starling, the ABI's director of general insurance and health, said: "Fraudsters continually look for new ways to con insurers, so we are upping our game. Early next year, we will be setting up a national insurance fraud register, which will contain details of all known insurance cheats. And at the same time the first ever national police insurance fraud investigation unit will begin its operations, making it harder than ever to commit insurance fraud."

Glen Marr, director of the Insurance Fraud Bureau said the organisation wanted consumers to report anyone they suspected of committing insurance fraud via its Cheatline: "At the IFB, we have access to a significant volume of industry data, use sophisticated and powerful analytical software, work in partnership with insurers, law enforcement and regulators, and have no shortage of reports being received from consumers of their knowledge or suspicions of those concerned with defrauding the industry, through our Cheatline facility.

"It's important to underline that some of those concerned with insurance fraud are also involved in criminal activities where there is harm to local communities."

InsuranceInsurance industryHome insurancePropertyTravel insuranceConsumer affairsMark Kingguardian.co.uk

PPI compensation bill hits Santander profits

Bank's profits down 21%, in part due to £538m cost of mis-selling insurance – potentially delaying float of its UK arm

A £538m provision to cover compensation for customers mis-sold payment protection insurance in the UK has made a dent in the profits of the Spanish bank Santander, which is hoping to float the UK business on the London stock market.

The bill revealed by Santander means that all the major players in PPI – which was supposed to pay out if customers lost their jobs or fell ill but often failed to do so – have now admitted the financial cost of mis-selling the insurance over the past decade. The bailed-out Lloyds Banking Group set aside £3.2bn in May; Royal Bank of Scotland is allocating £850m; Barclays is putting £1bn aside and HSBC £270m.

Profits at Santander fell 21% to €3.5bn (£3bn), in part because of the provision.

Ana Botín, head of the UK business and daughter of Santander's chairman Emilio, complained about the impact of regulatory changes on the bank's business. She stressed that the UK arm was beating its pledges to lend to small businesses, as set out in the Project Merlin agreement with the government in February.

"We continue to be a consistent lender to homeowners, despite weak demand, and to small- and medium-sized enterprises [SMEs], to which our lending grew by 27% and where we continue to exceed our lending commitments made under the Merlin agreement," she said.

The fall-off in mortgage lending was stark, after rapid expansion by Santander in the immediate aftermath of the 2008 banking crisis when other players pulled out of the home loan market. However, the Spanish bank can no longer keep up with the pace at which home loans are being repaid. Net lending – which takes account of mortgages repaid – was negative by £400m in the first half, falling 11%.

However, for small businesses the stock of lending was up 27% and gross lending – which adds up loans repaid and new ones granted – reached £4bn, some £2.1bn of which was for SMEs. The Bank of England is due to publish an official six-month update on Project Merlin on 12

Who will insure my rental property?

Q I am a landlady and have been renting out my property to four tenants (unrelated individuals) for over 15 years. When it came round to renewing my house insurance policy, I noticed that there was no reference to the fact that I was renting out the property. When I contacted my insurers, they claimed to have no record of me informing them that I would be letting out the property and they sent me a number of questions to answer. They then informed me that they were not interested in renewing my policy.

I am now struggling to find an insurer that is willing to take on the property even though in the 30 years that I was with my previous insurer, I never made a claim. I rent the property out to four graduates who are all currently employed, and the house has not been converted into bedsits. There are fire alarms and a carbon monoxide alarm, and the electricity and gas is certified. There is no security alarm and, as the property is Victorian, the windows are all wooden sash windows (replaced in the last decade).

Do you know of a good insurer that would be willing to take on such a property? Or will I need to make changes such as installing alarms/changing tenants so that they are classified as professionals (I am not entirely sure what is meant by this) or a family? I am really in need of your help as I only have a fortnight in which to find a new policy and I am having no success with my own research. NM

A As a matter of some urgency, you need to find out from your local council whether you need a property licence because the property you let is a 'house in multiple occupation' (HMO) as you are letting to four unrelated individuals who share kitchen and bathroom facilities. You are required by law to have a licence if an HMO is over three storeys high or let to five or more people but local councils can also require a property licence for smaller HMOs such as yours.

If your council does require a licence, you must get one for two reasons. First, it's a criminal offence not to and second, without a licence, you won't be able to get insurance for the property.

Because your property is let, conventional buildings and contents insurance is not appropriate. Instead, you need specialist landlord insurance which covers the building, your contents – eg furniture, furnishings, utensils, domestic appliances – (but not stuff belonging to your tenants), public liability and, if you want it, cover for loss of rent if the property is damaged and can't be let as a result.

Finding this kind of specialist insurance is relatively straightforward. You can either Google 'landlord insurance' which brings up a reasonable number of insurers and brokers dealing in this type of insurance or you can use an insurance comparison site such as moneysupermarket.com or gocompare.com.

PropertyHome insuranceInsuranceBuying to letVirginia Wallisguardian.co.uk

Travellers to Greece warned to check insurance as disruption continues

Holidaymakers advised to check with travel insurers if policies cover expenses incurred due to Greek strikes and protests

Holidaymakers going to Greece this summer should check with their travel insurer that they are covered for expenses incurred because of wildcat strikes and other protests.

In the past two months, Athenians have held several strikes and protested on the streets against austerity measures designed to set the country's economy back on track, and following the bailout measures announced last week it is possible these will continue.

Although the protests have not affected holiday bookings to the country, Rochelle Turner, head of research for Which? Holiday said people planning to travel there during the next few weeks should double-check with their insurance companies that they are covered in the event of anything going wrong.

She said: "If insurance companies feel that something has been going on for a long time, it becomes a 'known event' – people need to check whether they will be covered if they can't get to hotels because of a strike."

Cruise companies had been having trouble getting taxi drivers to take their travellers off ships, she said, while backpackers had found they could not get ferries because of strike action.

"You might be able to argue that wildcat strikes were not expected on the islands, because it hasn't happened there previously. But if you are in Athens it's perhaps quite predictable. Holidaymakers need to be aware that they might not be able to claim for expenses when they get back home," she said.

Bob Atkinson of price comparison site travelsupermarket.com said people taking package holidays which included transfers by ferry or some other form of public transport should be protected by the Atol travel insurance scheme and their tour operator should make alternative arrangements if necessary.

But those who have made their own travel plans need to read the small print on their policies.

For example, not all policies pay out for missed inbound flights to the UK as well as outbound ones. "Many only cover missed departures from the UK, not back," he said.

Even those who are covered should check with their insurer before committing to any extra expense: they especially should not try taking pre-emptive action, such as staying the night in a hotel near the airport, without checking with the insurer first.

"Imagine if the strike didn't happen," said Atkinson. "Even if it did, you will have to prove there was a strike and get confirmation from the ferry company that it wasn't operating.

"It's better to ring the 24-hour number and saying 'this is the situation, this is what I would like to do, can you authorise it?'. Make sure you take down the time, what was said and who you spoke to for verification later on."

Aviva, one of the UK's biggest insurers, agreed, saying that provided you are travelling by public transport to the airport, and so long as you did not know about the strike before buying the policy, you should be covered for the cost of missing an international departure.

Esure spokesman Adrain Webb said: "So long as [the holiday] is not booked via a tour operator, it will be covered up to £800 under the mis-departure section of the policy and we'll pay for any reasonable hotel costs too."

Travel insuranceInsuranceConsumer affairsConsumer rightsGreeceEuropeFlightsJill Insleyguardian.co.uk

When holiday operators go bust – Q&A

With travel company Dream Holidays going under, customers already abroad or with a break booked should know their rights

Hertfordshire-based travel company Dream Holidays, specialists in trips to Greece, Cyprus and Egypt, has gone bust, affecting an estimated 525 holidaymakers already abroad and 1,800 people with bookings.

Customers of Dream Holidays are protected under the Civil Aviation Authority's (CAA) Air Travel Organisers' Licensing (ATOL) protection scheme, so those abroad will be able to complete their holidays and return to the UK, while those yet to travel will be reimbursed. But Dream Holidays may not be the last travel company to go under this summer season so other travellers might not be so lucky. What are your travel rights?

I am a Dream Holidays customer stranded abroad. What should I do?

The CAA is working to ensure all protected customers who are overseas can stay in their accommodation until they are due to travel home. But some are being asked to pay again for their accommodation. If you are being pestered to pay, do so but keep a receipt and send a claim to the CAA on your return home so that a refund can be considered. Those customers protected under Dream Holidays' ATOL should receive a refund.

Will I be able to fly home as planned?

The CAA will ensure that all Dream Holidays' customers are able to fly home as planned, so you should go to the airport for your flight as normal.

I'm still worried. Can I speak to someone about this?

ATOL-protected Dream Holidays' customers who are abroad and experiencing difficulties should contact the CAA for more information on 0044 (0)161 444 5810. Those with bookings requiring general advice about refunds under the ATOL scheme should go to the CAA website or contact the CAA on 08444 933037.

I've booked a holiday with a travel company that is an ATOL member. Am I OK?

The ATOL scheme protects people who buy package holidays that include a flight, through UK tour operators. Whether you've booked for a complete air holiday package or just a flight, ATOL protects you from losing money or being stranded abroad if the tour operator goes out of business.

Under the ATOL scheme, if your holiday operator goes bust you will get a refund if you haven't flown yet. If you are already abroad, you will be able to continue your holiday as normal and your costs for coming home will be covered.

The CAA will try to get you on a return flight as close to your original departure time as possible, but should you need to pay for extra nights, transport and other outgoings, these will be covered if considered reasonable.

I paid for my flight with a credit card. Can I claim it back?

If you booked by credit card, you can make a claim via your card company. A part of credit card law, introduced in the 1970s and known as section 75, means credit card companies must take responsibility for refunding customers if the goods they bought don't turn up or the supplier goes bust. The total cost of the goods you are paying for must be more than £100 and less than £30,000 for the law to apply.

I paid for my flight with a debit card, would I be protected?

Anyone who made their purchase with a Visa debit card is covered by its Chargeback scheme, which offers similar protection to section 75. To make a claim customers must contact their card issuer, which then contacts the company's payment-processing bank to reclaim the money. This means that even if a company goes into liquidation it is possible to reclaim money, as the claim is made against a bank not the company.

My credit or debit card company is refusing to refund me

Sometimes card issuers misunderstand the section 75 and Chargeback rules and refuse a claim. Anyone in this situation should make sure they know their rights and argue their case. If all else fails contact the Financial Ombudsman.

The company I booked with does not seem to be an ATOL member but I have travel insurance. Will it cover me?

Check your policy as not all cover the collapse of travel providers.

Consumer rightsConsumer affairsTravel insuranceInsuranceCredit cardsMark Kingguardian.co.uk

Residents face demand for terrorism insurance

MP accuses London property management company of exploiting safety concerns to raise costs

An MP this week hit out at a property management firm for demanding that flat-dwellers pay for pricey "terrorism insurance".

Leaseholders in Walthamstow, east London, have been told they must pay around an extra £68 a year, on top of their buildings insurance premium. When one complained, he was told that "terrorist activity has in the past been present in Walthamstow". Three people living in the area were convicted in 2009 and 2010 for their part in an airliner bomb plot.

It is not clear how many people in Walthamstow have received the demand, though it could be as many as 2,500. Residents of other areas may have received similar demands.

Local Labour MP, Stella Creasy, has accused the company, Freehold Managers PLC, of "seeking to exploit concerns about terrorism to justify increasing the cost of buildings insurance for local residents". She has called for "an immediate apology" to the residents of her constituency.

Freehold Managers rejects her claims, saying Walthamstow "has not been singled out as a terrorist hotspot". As a prudent landlord, it adds, it insists all its properties are covered, in line with guidance from the Royal Institution of Chartered Surveyors (Rics).

A spokesman for Freehold Managers told Money that the ultimate beneficial owner of Freehold Managers is the Tchenguiz Family Trust. Mayfair property tycoon Vincent Tchenguiz's sprawling empire was the subject of a Money investigation in February into allegations of excessive charges at several subsidiaries. In early March he was one of nine men targeted in dawn raids by the Serious Fraud Office as part of its investigations into the collapse of one of the Icelandic banks. Vincent Tchenguiz was released without charge on the day of his arrest.

Those affected are leaseholders of "Warner" properties in Walthamstow, built in the late 19th and early 20th centuries. Freehold Managers has confirmed it manages about 2,500 properties in the district – mainly flats and maisonettes.

A longstanding Warner flat resident, who asked not to be named, told Money he received a letter from an insurance broker, Oval, which stated that he needed to pay £68 for a separate terrorism insurance policy. This would be in addition to his buildings insurance, which cost around £240.

He contacted Freehold Managers to say there was nothing in the terms of the lease to say he must have this cover.

The man received a reply from the company stating: "When these leases were written, terrorism on mainland England was non-existent. In this day and age it is prudent for the landlord to cover any insured peril relevant to their portfolio. The LVT [Leasehold Valuation Tribunal] in the past has confirmed it is reasonable to include terrorism … Please find attached a newspaper article showing that terrorist activity has, in the past, been present in Walthamstow."

The article, from the London Evening Standard in September 2009, reports on the case of a man from Walthamstow, and two others, who were sentenced to life imprisonment after being convicted of planning to lead a squad of suicide bombers in smuggling liquid explosives aboard transatlantic airliners. In July 2010, two more men from the area were found guilty of conspiring to murder in connection with the same plot.

The resident says: "Last year there was no terrorism insurance as a separate policy, but this year they've introduced it. I don't know one example of any terrorist blowing up their own property in the UK. I imagine every Warner property is affected by this. I've talked to all my neighbours and they've had the same policy included."

The resident contacted his MP, Creasy – herself a former Warner tenant – who says she is "furious", adding: "Their representative suggested they believed residents should pay a terrorist attack premium purely for residing in Walthamstow, using an incident from several years ago which did not refer to any activity in the locality to justify this slight."

While the resident says that, as far as he is aware, this is the first time he has been billed for terrorism cover as a separate policy, other residents may have been paying it for a few years. On a Facebook page, one says: "Well done Stella for bringing this into the public domain. I, along with everybody else, would love to have all our terrorism payments paid back. I believe we've been paying for two to three years."

A spokesman for Freehold Managers told Money that the "ultimate beneficial owner" of the company was the Tchenguiz Family Trust. This owns a large number of residential freeholds. However, Freehold Managers manages freeholds that are not owned by the trust, but by third parties. The freehold of the Warner properties is owned by an unnamed unit trust.

He says that since 1993, terrorism cover has been specifically excluded from most buildings insurance. That year, the government established Pool Reinsurance to cover the risk. "As a significant manager in Walthamstow, and throughout the country, Freehold Managers tries to ensure it adheres to best practice," he told us, adding that Rics guidance stated that "serious consideration should be given to taking out terrorism insurance".

He adds: "Any prudent party responsible for taking out adequate insurance … would consider the Rics guidance … as, in the event of an incident, the consequences of not taking out this insurance could be severe to the residents, who would be required, under their leases, to pay for the reinstatement of the property, but without the benefit of any insurance to cover the costs.

"There is also a requirement from insurers to insure whole portfolios and not just selected, or perceived at-risk, properties. This is dictated by Pool Reinsurance … I hope this clarifies why, as a prudent landlord, we insist all our properties are covered."

The spokesman also highlighted an LVT ruling from 2005 which stated that "we do not find it unreasonable in this day and age for a prudent landlord to include terrorism cover, even though the property might be in a quite (sic) residential area".

• This article was amended on 18 July 2011 to clarify that soon after his arrest Vincent Tchenguiz was released without charge.

InsuranceHousehold billsConsumer affairsRenting propertyPropertyUK security and terrorismRupert Jonesguardian.co.uk