Travel insurer agrees reader’s friends were due a full refund

My elderly neighbours are having terrible difficulties claiming money back from Insure and Go after they had to cancel a once-in-a-lifetime trip to the US to visit family. They have had some money back, but it seems the airline they were due to use is withholding a large chunk of the £2,487 they paid. They have been caused much distress and ill health due to the worry. EW, Braintree, Essex

This case has taken some considerable time to unpick, but here goes. Your neighbours paid £2,487 for four return flights to San Francisco through travel agents Chelmsford Star Coop and then, sensibly, took out their own travel insurance with Insure and Go, paying £180 for a single trip policy.

Due to ill health, the trip had to be cancelled and a claim was submitted to Insure and Go. After deducting the airline administration fee and being reimbursed the numerous US taxes and UK air passenger duty, there was still a shortfall of around £800 which couldn’t be explained, and which your neighbours wrongly blamed on the airline. After investigation, I discovered that the flight broker used by Chelmsford Star had wrongly included the £197 fuel surcharge per ticket in the category of “tax” on the invoice, for which the insurer would not ordinarily be liable. After I pointed this out, Insure and Go agreed that the problem stemmed from the documentation it was sent and a further no-quibble refund of £788 is now on the way.

Your neighbours were overjoyed and I know that this money, which they thought was lost, will make a big difference to their lives. If ever there was a case of job satisfaction as the Capital Letters columnist, this was it.

Answering your letters this week is Steve Playle, Trading Standards officer and Team Leader at Surrey Trading Standards Service.

We welcome letters but regret we cannot answer individually. Email: capital.letters@guardian.co.uk. Please include a daytime phone number.

The ombudsman’s recommendations on compensation for victims of the insurer’s collapse are being snuffed out

On 5 November 1605, Guy Fawkes intended to blow up parliament. He failed, but on 5 November 2009, the similarly bearded Labour MP Paul Flynn declared Fawkes’ work was successfully completed. Any idea that parliament was supreme in this land was “a quaint old-fashioned view”, he told the parliamentary ombudsman, Ann Abraham.

The issue under discussion was Equitable Life, and the arcane constitutional point is rather important to the million or so former investors still awaiting compensation from the government for the insurer’s collapse. It also raises the issue: what is the point of the ombudsman if the government can ignore her recommendations?

Abraham said in her report in July last year that the investors should be compensated by the government; the courts have said they should be compensated by the government; parliamentary committees have said they should be compensated by the government; 337 MPs (that’s more than half) have signed a motion saying they should be compensated by the government.

Meanwhile, the government has ummed and ahed and said, “Well, certainly some should get something but let’s wait and see, shall we?”

The meeting of the commons public administration select committee on 5 November highlights the problem. Abraham was asked whether ombudsmen’s recommendations should be binding on the government. She had, after all, made a series of recommendations in her report that found maladministration by the government’s regulatory authorities, and said the government should fund a compensation scheme for all those who lost out, and get an independent assessment of who should receive money and how much.

Instead, the government decided compensation should be limited. It appointed Sir John Chadwick as its very own independent adviser to sort it out. He says he will follow the ombudsman’s approach, but will take into account “the extent to which the government has accepted her findings”, which is not to a very great extent at all. He has put his views out to consultation.

Eventually, last month an early day motion was drafted by MPs in order to get parliamentary discussion of the report. This called for acceptance of the report’s recommendations on compensation and is the motion more than half the Commons signed, including 160 Labour MPs. On the day, however, nearly 90 of those Labour votes went walkabout, finding themselves in the government’s No lobby. So the Noes had it, 294 to 269, and the motion fell.

As a result, according to Abraham, “the government was able to act as judge and jury in its own court”, hence “people saw no visible distinction between parliament and government”.

The reason why this matters to people other than Equitable Life investors is that the ombudsman was set up by parliament (not government) to report to parliament (not government) as a means of holding government and its officers to account. It allows ordinary people to gain redress – not just findings of guilt and apologies but actual monetary compensation – where government agencies are guilty of maladministration. It keeps matters out of courts, where class actions are extremely complex and extremely expensive.

But if the government can ignore the findings of the ombudsman – treat them as simply someone’s opinion, not as findings with the force of law – then the system isn’t working. Why would the public look to the ombudsman whose reports are thorough and time consuming, if there is a risk nothing will come of them?