Bank setup DD without permission

dpluxor2

Hi, I will try to keep this as short as possible.... I fell out with my bank over charges so decided to move my current account to another bank. I cancelled all DD's with my old bank and set them up with my newone. One was left and that was a loan payment to my old bank, when I called to ask them to change the direct debit to my new bank, they said "Thats not possible, the payment for your loan has to come out of an account with us !!" I argued but they would not budge so I just went online and cancelled the DD myself. To cover myself I setup a standing order from my new bank for the loan payment to hit the loan in good time. I logged on today to my old bank to make sure that the loan payment had hit (which it had) and I was amazed to see that the bank had re-setup the old DD and made a payment from my old unused current account to the loan. This has put me into unauthorised OD and put two identical payments into the loan !!! Where do I stand with all this please. Have they broken the DD guarantee.

CLAPTON

Sometimes the condition of a loan is that the payment comes from a linked bank account by DD. By linked I mean an account from the same bank.

Did your agreement say that?

If it did then I would say you will have some difficulty fighting your corner but if it doesn't then make a formal complaint.

jonesMUFCforever

So set up the D/D or standing order to go into your old account to meet the loan repayment.

dpluxor2

jonesMUFCforever wrote: »

So set up the D/D or standing order to go into your old account to meet the loan repayment.

That's what they said but I want to close the current account once the agreed overdraft is cleared as it's a premium account costing £13 a month

CLAPTON

why not downgrade the a/c to any 'ordinary ' fee free a/c

rb10

Any direct debit must be cancelled with the 'originator', i.e. the company that is collecting the money. So if you don't tell the loan people at the bank, but just remove it from your dd's in your current account, then they can just set it back up again, as you have not told the loans department that you want it cancelled.

olly300

rb10 wrote: »

Any direct debit must be cancelled with the 'originator', i.e. the company that is collecting the money. So if you don't tell the loan people at the bank, but just remove it from your dd's in your current account, then they can just set it back up again, as you have not told the loans department that you want it cancelled.

Incorrect. This has been tested with the financial ombudsman service.

If you allow a company to collect a direct debit from your bank account and you cancel the direct debit with the bank, the bank is not allowed to give money from your account to the company.

Some companies will automatically reset up a direct debit once you have a cancelled it and take funds from your bank account.

In my case Tiscali did this recently. However as my bank has no contract with Tiscali, I asked for my money back which the bank repaid under the Direct Debit Guarantee then claimed the money from Tiscali.

Tiscali then had to try and chase me in a different way for the money.

In my case I actually owed Tiscali no money and just threatened to take them to court due to my previous communications with them.

jamesd

So if the bank had paid the stockbroker under the direct debit, it must have been in error because he had cancelled the direct debit. And if the bank makes a payment in error the customer is entitled to a full and immediate refund.

But in this case we found that the stockbroker had Mr F’s authority to debit his account independently of the direct debit. It was in the terms and conditions of his contract with the stockbroker that the costs of each deal would be taken from his nominated account. So that gave the bank authority to release money from his account to the stockbroker, whether or not this was done via a direct debit, and we did not uphold the complaint.

Your bank is probably authorised by the loan agreement to take the money from your account. I expect that if you take this to the Financial Ombudsman Service you'll lose.

If they have no charge accounts, switch to one of those and pay that way. Or repay the loan with a new loan from somewhere else.

natweststaffmember

dpluxor2 wrote: »

That's what they said but I want to close the current account once the agreed overdraft is cleared as it's a premium account costing £13 a month

Have you considered a loan with your current account provider? That would deal with the whole issue perhaps and then you can sever your ties to natwest. Unfortunately the bank is within its rights to do so albeit, I do have an untried method that I think will work but I would prefer not to post on the forum for obvious reasons.

dpluxor2

natweststaffmember wrote: »

Have you considered a loan with your current account provider? That would deal with the whole issue perhaps and then you can sever your ties to natwest. Unfortunately the bank is within its rights to do so albeit, I do have an untried method that I think will work but I would prefer not to post on the forum for obvious reasons.

Ehem !! Yeh, unfortunately its quite a big loan and with me being so new there, they are not interested until we have some history. Your last comment sounds interesting are you willing to PM me with your thoughts . In the long term I guess I may have to do a three way transfer or whatever (new bank > natwest old account > loan), I am more interested in the short term by way of the £38 they will charge me for going OD.

dunstonh

It probably isnt this but you never know....

banks can override you on direct debits which cover a liability with them. There is a security indicator (may have different names at different banks) which used to indicate that the d/d should not be cancelled. It used to be a big red "S" next to the entry in the paper days and just an S marker in the early computer days. It was not something that appeared on any customer facing screens.

If these were cancelled in error, they were usually set up again quickly.

Different banks may have different ways. Especially the ex building societies.