SSIAs

I have an equity-based SSIA which has been losing money ever since it was opened. I have now had enough but I am told I have no choice but to continue paying my monthly contribution or face a massive tax bill? This sounds unfair. Can I really be forced to continue to plough money into a bad investment when I want to cut my losses?

Mr T.D., Dublin

To save its blushes, I will not name the institution with which you have your Special Savings Incentive Account (SSIA) but it appears it needs to invest in training its own staff.

Quite simply, it is talking nonsense. That is bad enough but, in doing so, it is costing you money and that is just out of order, especially for a specialist provider of investment products.

First things first. If you have made a monthly contribution to your SSIA for each of the first 12 months of its life - and that date would now have passed for everyone - there is no obligation on you to put another penny, or cent, into it under the terms of the Government scheme.

However, some providers, particularly among the equity-based offerings, have also set minimum contribution levels. Yours is one of these. If you stop paying now, as you are entitled to do under the legislation, your particular SSIA fund will close because it requires a minimum monthly deposit of €125. That would leave you open to a 23 per cent tax charge on everything in the account - your initial capital and the Government contribution, though not, evidently, the non-existent gain. Still, at least you can come down to that level from your current €254 a month.

What else can you do? Well, you need to check which of its range of funds this provider has you in. You can switch into less risky funds, although you do need to remember that after three years of a bear market, now might be precisely the time to be in the less risk-averse side of things. Switching is, I understand, free as long as you do it only once a year.

Under the SSIA scheme, you should also be able to transfer out of your equity-based fund to another equity fund with no lower limit on contributions - which would keep the equity option open but not consume any more of your cash until you are comfortable that markets are on the rise again - or to a deposit option, where you would be accepting the losses to date but avoiding any further risk profile down the line.

It may be that there are some penalties within your existing SSIA provider for transferring and you would need to consider the scale of these before making a move one way or the other.

Central Bank notices

From time to time advertisements appear in The Irish Times from the Central Bank giving notice that, at the request of the firm(s) concerned, the Central Bank has, under Section 16(1)(a) of the Investment Intermediaries Act 1995, revoked the authorisation of the named firm(s). Can you please clarify what this is about?

Mr G.McD., e-mail

All firms offering financial services within the Republic are required to be licensed by the Central Bank.

The notices to which you refer are simply to inform people who might be doing or planning to do business with such companies that they are no longer legally entitled to practice as investment intermediaries.

As is evident from the wording, these notices follow requests from the intermediaries themselves. This can arise because the qualified advisers are retiring or the principals for the company are quitting the investment business. It can also, at times, be a formal step by a company which realises it is running into trouble and wants to make sure it is seen to be doing the right thing.

Cases where the Central Bank is notified by third parties that someone is illegally carrying out business, or attempting to do so, in the State will feature warning notices worded in an entirely different manner.

Sears shares

I have discovered share certificates held by a deceased relative in the name of Sears. There is no relating correspondence. Are these shares now "dead"? Am I correct to think that Sears, otherwise Selfridges, was absorbed into what is now AstraZeneca - or is there any relation?

Mr B.T., Galway

Sears is no more, but that does not mean the shares are "dead" in the sense of being worthless.

Sears was in the 1990s one of the many conglomerates that increasingly found themselves in trouble because, having acquired a host of sometimes unrelated companies, they discovered they had no idea of how to extract value from them for the sake of the shareholder.

Selfridges, as you note, was indeed once part of Sears but it was spun off before the denouement. At the end, serial retail entrepreneur Philip Green stepped in to buy up the group and break it up.

Backed by the elusive Barclay brothers, his cash bid of £549 million sterling - a 6 per cent rise on his original offer - was accepted in late January 1999. That amounted to £3.59 sterling a share, or close to €5.20 a share.

You will need to contact, in the first instance, the registrar who acted for Sears at the time. Their details should be printed on the share certificate you now hold. As the bid was accepted and the company moved into private hands with Mr Green, the certificate cannot be traded but it can be redeemed under the terms of the 1999 offer.

Before you ask, it is unlikely that any money held in respect of your aunt's share certificate since then will have attracted interest. In fact there may be a charge for the administrative work in holding on to this cash for shareholders who failed to return their share certificates at the time to take up the cash offer. In any case, the registrar will have the details or a point of contact for whoever is currently dealing with those shares that have never been reclaimed.

One other point.

Although you have discovered the share certificate, you will probably need to check with your aunt's will to find out whether it belongs to you or was left to someone else under the terms of that will. Assuming it is yours, capital gains will only arise on the gain in the share between the time of your aunt's death and the time the cash offer kicked in. If the cash offer closed before your aunt died, capital gains will not be an issue but, depending on the amount involved and other elements of the estate, capital acquisitions tax (inheritance tax) may well apply.

Warranties

In last week's Q&A, a piece on the demand that purchasers of Dell computers using its three-year finance arrangements also acquire expensive and non-obligatory warranties stated that the warranties were provided through Irish Life. Irish Life informs me that it does not sell such warranties although the Dell finance arrangements come through Permanent TSB Finance, which is part of the Irish Life & Permanent group.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.