Change to direct debit rules...

expeditionist

Hi guys

I had a direct debit set up on my current account to automatically pay off the full balance of one of my credit cards, but I hadn't used that credit card for a long time and the direct debit wasn't taken since August 2008.

I used my credit card last month and the direct debit was due to be taken again this month, but my bank didn't pay it - they have no such direct debit listed against my account and say the credit card company cancelled that direct debit in 2008. However, the credit card company says that they didn't and that their records still show the direct debit as active!

I don't know what has happened? My credit card company has charged me £12 for missing the payment date! It's not my fault. Who is responsible?

Any advice appreciated.

Thanks, expeditionist

Hazzanet

Direct debits 'expire' after 13 months of non-use as it's assumed that you no longer pay the company and you may have forgotten to cancel the direct debit.

What is a dormancy period?


All banks hold details of Direct Debit Instructions on file for a minimum period of 13 months from lodgement of the Direct Debit Instruction, in the event of no collections, or from the date of the last payment.



Why has a dormancy period been introduced?


The dormancy period rule was introduced as a safeguard to the Direct Debit Scheme to protect payers from Direct Debit Instructions being live on their account indefinitely. So if you should forget to cancel a Direct Debit it will be removed from the banks' system after the dormancy period has lapsed.



What happens to a Direct Debit Instruction at the end of a dormancy period?


After the dormancy period has passed, the bank will remove details of the Instruction from their system. Before claiming further Direct Debit payments the organisation must obtain a new Direct Debit Instruction or your authority to continue collecting. If this is not done your Direct Debit payment may be returned by your bank.

From: http://www.thesmartwaytopay.co.uk/did-you-know.asp

YorkshireBoy

However, the credit card company will have received notification that the DDI had lapsed under the said dormancy rules via an ADDACS report.

Then again, due to the timings (Aug 2008/Sept 2009 is 13 months), it's possible the DDI was active when the statement was produced and cancelled before the payment due date. In which case the credit card company wouldn't have known when they issued the statement.

That said, if you paid quickly by other means as soon as you found out, and you haven't previously paid late, then they may refund the £12 late payment charge.

expeditionist

Thanks for your concise replies.

That would seem to explain things. My credit card statement showed that the money would be taken by direct debit automatically.

I don't believe I should be held responsible for the late payment on the grounds that:

1. nobody told me there was a dormancy period
2. nobody told me the direct debit had been removed from my account

It's only fair... surely. If I'd known I would have paid on time. The credit card balance was only a tenner! I'll pay Monday morning.

Does anybody have any precedent in this situation please?

Thanks

expeditionist

OK, the credit card company waived the unpaid direct debit fee over the phone this morning, but it took 20 minutes of polite and charming reasoning followed by blank refusals and requests to put my complaint in writing, it's only when I started to rattle and asked to speak to a supervisor that they caved in - it makes me think that 'nice' isn't always the best way to get results!

In conclusion, does anyone else agree that the banks shouldn't be allowed to delete direct debit instructions from current accounts without sending a letter to the customer telling them of the action?

97trophy

expeditionist wrote: »

In conclusion, does anyone else agree that the banks shouldn't be allowed to delete direct debit instructions from current accounts without sending a letter to the customer telling them of the action?

No, I think it is a good policy. Maybe 13 months is too soon.

The bank should have told your CC company though.

expeditionist

Well I don't believe that the banks should be allowed to remove direct debits without sending out a letter to the customer telling the customer that they've been removed.

I'm not saying don't delete them, I'm saying don't do it without telling the customer what's been done.

Extant

expeditionist wrote: »

Well I don't believe that the banks should be allowed to remove direct debits without sending out a letter to the customer telling the customer that they've been removed.

I'm not saying don't delete them, I'm saying don't do it without telling the customer what's been done.

Do you really believe that, though, or are you just saying it because of one bad experience - i.e. this one?

The measure is, ultimately, a safe guard - it's there to stop accidents happening, Direct Debits being claimed improperly etc. It's been an issue in this case, but it doesn't mean there's anything fundamentally wrong with the practice.

Do you really think it's sensible to waste paper to inform someone a direct debit for their canceled with the company satellite TV is going to lapse?

Do you really think it's sensible to waste paper to inform someone a direct debit for a one off investment is going to lapse?

etc.

CLAPTON

If indeed the CC statement said that the payment would be taken by DD then it would seem reasonable to expect them to have a system in place to ensure this happened.

either the CC company should know that no payment has has taken place for 13 months (easy to do) and advice the OP or they should have set up a new DD which they can do easily electronically too.

not rocket science

olly300

expeditionist wrote: »

Well I don't believe that the banks should be allowed to remove direct debits without sending out a letter to the customer telling the customer that they've been removed.

It wouldn't be cost effective as they would be sending out hundreds of letters.

In addition if there were problems with the post like now, people wouldn't get the letters for a while.

expeditionist

Well maybe customers should at least be advised about the 13 month dormancy rule - that information isn't passed on to customers when they set up their direct debits, I don't believe it's common knowledge - that much at least.

Furthermore, the banks could put information about removed / lapsing direct debits in advance on the customer's statements. And they only need to advise about cancellations not initiated by the customer or payee.

Personally, if I have direct debit instructions on my account it's because I want them to be there, I'm not so scatty as to leave direct debit instructions active on my account. I'll cancel them as soon as they're no longer needed, although I understand many people don't.

Also, the direct debit guarantee provides an immediate refund to the customer if someone takes a direct debit in the wrong amount or by mistake, but there's no system to reimburse the customer for an unpaid direct debit that the bank removed without the customer's knowledge.

I just feel that all parties failed to inform me that the direct debit instructions were no longer in place. In fact, they misled be failing to tell me and by printing on my credit card statement that the direct debit was going to be taken automatically and then charging me when it was returned unpaid.

It might cost the banks, but this is only right and fair