Direct Debit Indemnity Guarantee

l13unn79

Hi all

I have been back to the bank today and they have told me the money will be put back into my account tomorrow. They have said though that if they cannot retrieve the money from the gym they will take the money back out of my account. I doubt they will get the money due to me not having a copy of the cancellation letter. I am at the moment trying to get a date for the day which i phoned the gym...but not sure if i still have that bill. In your opinions is it seeming that although this money is being given to me that it will be took back and i will end up with nothing....


Thank you all so much for your help in this matter and sites like this are a godsend to people like myself

Lee

System

Mikeyorks wrote: »

If you insist on the funds being returned, by your Bank, under the DD Guarantee .... they then ask to be indemnified by the originator Bank. That Bank will immediately contact the Gym and ask to be indemnified for the claim. If they decline, because they consider no error has been made, the originator Bank signals back to the OP Bank that they won't be getting indemnified.
The OP Bank then re-debits the OP account, in order to recover their funds. End of story.

How do you know this? It is completely different from my experience, and breaches the fundamental principle of banking law that the OP's bank cannot take money from the OP's account without the OP's authority. I repeat that whether there has been an error is not for either bank to enquire into; it is a matter between the OP and the gym.
If the OP's bank reverses the direct debit, the gym's bank does not need the gym's authority to reverse the credit in the gym's account; that's the flip side that companies using direct debits have to accept. I repeat that is then up to the gym to pursue the OP for payment by other means, if it thinks it is entitled to it, plus, if it sees fit, compensation for what it claims is his mischievous reversal of the direct debit.

willo65

YoungNick wrote: »

How do you know this? It is completely different from my experience, and breaches the fundamental principle of banking law that the OP's bank cannot take money from the OP's account without the OP's authority. I repeat that whether there has been an error is not for either bank to enquire into; it is a matter between the OP and the gym.
If the OP's bank reverses the direct debit, the gym's bank does not need the gym's authority to reverse the credit in the gym's account; that's the flip side that companies using direct debits have to accept. I repeat that is then up to the gym to pursue the OP for payment by other means, if it thinks it is entitled to it, plus, if it sees fit, compensation for what it claims is his mischievous reversal of the direct debit.

The gym CAN counterclaim and the op's bank CAN debit funds back from the account.

System

The OP has cancelled his DD authority in favour of the gym. The gym could attempt to revive it, possibly electronically; and the OP's bank would not then, in practice, check whether the gym has the OP's authority to revive it. Having thus, fraudulently, revived the authority, the gym could, fraudulently, attempt to take another payment. In the (extremely unlikely, I think) event that the gym did all this, the OP can (1) demand that his branch instantly reverse this fraudulent DD (2) forcefully suggest that BACS suspend the gym's membership of the DD scheme, because they are flagrantly abusing the scheme (3) inform the police, who alas, won't take much interest, although the gym's (I stress, hypothetical) actions would definitely be criminal.
The gym can also whinge to their bank that their bank shouldn't have reversed the credits the OP says they wrongly took. If the gym do this, their bank will tell them to get lost; that's the downside of the convenience to them of the DD scheme, and it's why they have to indemnify their bank against the possibility of their bank losing out.

Mikeyorks

YoungNick wrote: »

How do you know this? .

Perhaps it's from 10 years experience of managing a low volume but high value DD system. And being a nominated 'indemnifier' for the Company to our BofE account?

It is completely different from my experience

..... which obviously has not given you sight of the 'inside of the box'.

, and breaches the fundamental principle of banking law that the OP's bank cannot take money from the OP's account without the OP's authority

..... the OP did not cancel the Mandate with the Bank ... that is the authority.

If the OP's bank reverses the direct debit, the gym's bank does not need the gym's authority to reverse the credit in the gym's account

..... the originator's Bank are required to contact one of the nominated indemnifiers within the originating Company and ascertain if the indemnity will be met. In the event of a negative response - they will send the claim back to the Bank holding the mandate.

I repeat that is then up to the gym to pursue the OP for payment by other means

..... repeat as often as you like - you're wrong. The gym may choose to do that ..... but they would be pretty stupid to admit the indemnity claim ........ and then continue to pursue that which they have just refunded .. as a debt!

System

The conversation is supposed to go:
Originator's bank: "DD such-and-such had been reversed, so we are reversing the corresponding credit to your account in accordance with your indemnity."
Indemnifier: "That's not fair, we were entitled to take the money."
Bank: "Sorry, you'll have to sort that out with your customer, that's why you have to give us an indemnity."
Maybe your bank does it differently? If so, they are doing it wrong. How on earth could the originator's bank either (a) just take the originator's word for it that they were entitled; or (b) take it upon itself to become the arbiter in the dispute between the originator and the originator's customer, relying solely on assertions by the originator?

Mikeyorks

YoungNick wrote: »

Maybe your bank does it differently? If so, they are doing it wrong.

So - in your fairytale - what is the point of having an indemnifier? And what is the point in having a conversation with them? If they serve no purpose other than being told that money will be deducted regardless!

They are the first determinant of whether 'an error' has been made. If it has - they admit the claim ............ if not, they would normally reject it.

Mikeyorks

YoungNick wrote: »

How on earth could the originator's bank either (a) just take the originator's word for it that they were entitled; or (b) take it upon itself to become the arbiter in the dispute between the originator and the originator's customer, relying solely on assertions by the originator?

As you added some bits a further - and last - response.

The originator is a trusted organisation ..... which answers both a) and b). For further info read the FAQs on the DD site and which covers those points re trust.

System

Don't know which "DD site" you mean. The financial ombudsman's site
http://www.financial-ombudsman.org.uk/publications/ombudsman-news/27/27-directdebit-guarantee.htm
makes it absolutely clear that the customer's bank has to reverse a disputed direct debit at once, no questions asked, 'pending further investigation'. For an instructive example of the normal situation where the creditor cannot revive the direct debit, see the case of Mrs B.

complaint upheld
It was irrelevant whether Mrs B owed money to the school. What was relevant was that her bank had paid out under a direct debit that she had cancelled. So, under the direct debit guarantee, once Mrs B notified the bank of its error, it should have refunded the money straight away. It wasn’t for the bank to decide whether or not Mrs B owed the money to the school.

(of course, in the gym case, the OP hadn't cancelled the DD. But he has now.)

For an instructive example where someone was swinging the lead, and his bank had another (indirect) authority to make the payment, see Mr F.
There is nowhere any backing for the assertion that originators give their bank an indemnity, but don't honour it if they feel hard done by.

willo65

YoungNick wrote: »

Don't know which "DD site" you mean. The financial ombudsman's site
http://www.financial-ombudsman.org.uk/publications/ombudsman-news/27/27-directdebit-guarantee.htm
makes it absolutely clear that the customer's bank has to reverse a disputed direct debit at once, no questions asked, 'pending further investigation'. For an instructive example of the normal situation where the creditor cannot revive the direct debit, see the case of Mrs B.



(of course, in the gym case, the OP hadn't cancelled the DD. But he has now.)

For an instructive example where someone was swinging the lead, and his bank had another (indirect) authority to make the payment, see Mr F.
There is nowhere any backing for the assertion that originators give their bank an indemnity, but don't honour it if they feel hard done by.

Your still wrong. If the gym makes a counter claim then as I have stated before the bank will reverse the credit back to you. If the customer uses "Gym has made an error" the bank will refund but then the gym will check this out and say we didn't make an error therefore the D/D gurantee doesn't cover this matter. If the gym admitted she had cvancelled then she will claim as "Gym has made an error" and gym would say "oh yes" all would be fine.

Because the gurantee is there doesn't mean you can abuse it. I know in OP's case the gym did make an error but as far as the gym is concerned they have not.