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Out of pocket after illness forced cancellation of trip

My brother-in-law had to cancel a trip to Canada when he was diagnosed with acute leukaemia last September - he is still seriously ill in hospital. He has asked me to obtain a refund on his air ticket.

The trip was arranged by Canadian Affair, which has refunded 20%of the cost, £76.91. I have been in correspondence with both Canadian Affair and the travel insurer, Towergate Chase Parkinson, trying to obtain the balance. The insurer argues that the airline should refund the taxes and duties portion of the fare, but Canadian Affair says they are not obliged to do so. The airline, Thomas Cook, refers me back to Canadian Affair. The cost of the flight was £41.50, the tax and surcharges amounted to £286.50 and the travel insurance was £39.99. SR

Answer: Towergate Chase Parkinson has agreed to fully reimburse your brother-in-law with the balance of the air fare costs. A spokesman for the insurer said it had not previously understood the position adopted by Canadian Affair.

Question: HSBC has closed my wife's bank account, without authority and without her consent. It has sent her a cheque for the balance in her account, which is a worthless piece of paper without a bank account. She seems to have been the victim of identity theft. As my wife does not speak English as a first language, she asked me to deal with HSBC.

We were asked by HSBC to go to a branch, with proof of identity, to resolve the matter. There we were told that a letter had been sent to her last December, warning if she failed to contact them her account would be closed - she never received that letter. It apparently stated that "activity on your account suggests that your circumstances have changed and we may need to update our records". As her circumstances had not changed, we did not know what this meant.

The HSBC employee explained that the account was "locked", so she could not tell us until we provided further proof of identity and answered additional security questions. We were frustrated by this and asked to see a manager. We were then told that the problem related to a large sum of money that my wife paid into her account in September last year, following which large sums were withdrawn on her debit card outside the UK.

My wife had been in Bulgaria at this time and paid money to renovate her apartment there. She had pre-warned the bank she was doing this. The payments were not declined or queried at the time.

The branch then told us that because of the bank's investigations, it was unable to reopen my wife's account. We then realised that the bank had closed the account and that it had issued a cheque for the balance, which could not be used.

My wife asked for the money in cash, but was told this was not possible as it was not a branch cheque. Instead, the cheque would have to be cancelled and the cash sent to the branch. We asked how long this would take and was told this was out of the branch's hands.

We then left, but submitted a complaint to the bank. Soon after, my wife received a letter from Littlewood's, saying that her application for credit had been declined - yet she had made no such application. When I phoned Littlewood's, it emerged that someone had used her identity to order an iPad2 and a handbag, requesting the items be delivered to another address. Littlewood's had been suspicious, recognised that an incorrect date of birth had been used, rejected the order and wrote to my wife.

Answer: Littlewood's told me this was a case of identity theft and registered it with the anti-fraud agency CIFAS. I was told my wife would have to contact the credit reference agencies to ensure her credit status was not affected. I tried to register my wife to do this, but as she no longer has a credit or debit card because of HSBC's actions, we have been unable to do this. DS

You seem trapped in a nightmare of implied allegations that you and your wife are unable to refute and which Franz Kafka might have recognised. To make matters worse, HSBC insists that to comply with money-laundering regulations, it is unable to reinstate your wife's account.

A spokesman for the bank says that your wife breached the terms and conditions of her account. "HSBC closed [the reader's wife's] account in line with our terms and conditions," he said. "On several occasions [she] deposited tens of thousands of pounds into her account in cash and then withdrew the funds within a day or so overseas. This was not in line with her existing use of her account and was a money-laundering concern for the bank.

"HSBC has robust procedures for activity like this." The bank points out that another bank, Coutts, has just been fined £9m for breaches of money-laundering regulations. Responding to your complaint about your wife not being able to access the funds from her account, HSBC says that your wife collected her account balance in cash from the branch on the same day you wrote to us.

HSBC adds that there is no indication that your wife has been a victim of identity fraud in relation to her bank account. What your wife's difficulties illustrate with clarity is the need for people dealing with large sums to recognise the importance of complying with money-laundering regulations and to plan transactions very carefully to ensure that they neither breach those rules, nor appear to be engaged in dubious activities. This is especially true where a person is involved in cross-border transactions. You tell us that you will now complain to the Financial Ombudsman, seeking to reinstate the account with HSBC. However, it is clear that HSBC will continue to object to this.