Dominic Coyleanswers your questions.

Problems at First Active

I thought that our battle with First Active had been finally put to rest once my wife received a letter of apology for overcharging in relation to payments taken for four months after a five-year loan was paid off in February, along with a cheque for €250 as a gesture of goodwill for the inconvenience caused on July 19th last. However, this month, First Active is continuing to debit her account for the loan.

What do we do? We have received goodwill cheques and account closure notification but First Active is still taking money from her account even though the loan was paid in February 2007 and the account was closed. We can't seem to stop them and they don't seem to be able to stop themselves!

Mr PS, Dublin

First Active clearly has a problem although, it now emerges, it is not entirely its fault for this fiasco.

Having once again contacted First Active, I gather the root cause of the problem is that this loan - at least towards the end of the five-year period - was being paid by standing order from an account at another bank.

The nature of standing orders is that they continue until such time as they are cancelled by the account holder - ie your wife.

Notwithstanding that, First Active clearly has a lot to answer for in this case - including the very existence of the standing order which was inexplicably taken out on its instructions part way through the loan.

At its most generous, it is impossible to escape the conclusion that there is a significant problem with the customer service operation at First Active. This series of overpayments has been the subject of regular communications between the bank and yourselves.

Even if not before, you would assume First Active would have got to the bottom of the problem - ie the standing order - when it sent you the letter of apology and ex gratia payment.

To be fair, I gather that following this latest complaint, First Active did at least respond swiftly, personally delivering the amount in question in the form of a cheque to your wife last week (along with a shopping voucher).

The bank confirmed to me that your wife initially paid off this loan by direct debit - a standard industry procedure and one that would have been terminated by First Active on conclusion of the loan arrangement. This was only changed last August - at the bank's request - as a result of its integration with the systems of its parent group Royal Bank of Scotland, which also owns Ulster Bank. The bank tells me this is now its preferred repayment option. That any bank would prefer payment by standing order - over which the customer has total control to terminate - over direct debit which cannot be terminated without the bank's consent, beggars belief. Clearly, elements of First Active's operation are in some confusion.

CGT on rentals

I really am concerned that you may have got it wrong in your answer dated August 10th, regarding capital gains tax on rental properties, in which you state that the final 12 months is deemed owner-occupied.

My understanding is that this only applies if the property has been you residence for some (any) part of your period of ownership. As I understand it, if the property has been rented throughout your period of ownership, then the final 12- month rule does not apply.

This is very important for me as I have sold and paid CGT on three rental properties over the last five years - none ever lived in. Consequently, I have not claimed exemption to the CGT for the final 12 months.

Mr JH, e-mail

You are quite correct. My reply to the previous query should have stated that the capital gains tax exemption on the final year of ownership of investment properties applies only to property that was, at one time, owner-occupied by the taxpayer. My thanks to a number of correspondents who were quick to highlight my error.