Direct debit refund refused!?

pmduk

I hope the OP will update this, it's a worrying development and will affect my use of DDs if the co-ops attitude stands.

exel1966

Not sure where the OP or other posters have got the idea that if the account is in credit the DD won't be taken. Absolutely standard practice for utility companies to collect in this way.

It will always be taken monthly as agreed regardless of whether the account is in credit or not. As MikeYorks stated the OP should ask for a reduction in the monthly DD or a refund from npower to bring the account back to a near or zero balance.

The OP has NO right to a DD claim as the DD collection sounds fully legitimate based upon the info given.

cottager

This is my understanding of our contract with nPower too. Don't like it, as if we're 'down' in a winter quarter I'd much rather pay/top up the difference with a one-off payment from another source (thus keeping the regular DD amount lower) than be lots in credit at other times; but that's the way it is to get the discount. They actually review the DD amount 6-monthly don't they? -- thought I'd read something to that effect fairly recently, but could be mistaken.

Blenheim_2

alex69 wrote: »

No payment was due for the month as the account was in credit.

Oh dear, I suspect you have caused a great deal of trouble based on your own misunderstanding of how you are paying npower for your energy supply.

td_007

cottager wrote: »

This is my understanding of our contract with nPower too. Don't like it, as if we're 'down' in a winter quarter I'd much rather pay/top up the difference with a one-off payment from another source (thus keeping the regular DD amount lower) than be lots in credit at other times; but that's the way it is to get the discount. They actually review the DD amount 6-monthly don't they? -- thought I'd read something to that effect fairly recently, but could be mistaken.

There is nothing to stop you from calling them in between review period to check on the credit/debit balance and if you have a credit then you can ask that it be refunded. So also, if the a/c is in debit then you can also make a one-off payment. At my last review, when the dd amount was increased by £10, I called to find that the a/c was in debit. I paid it off over the phone and the original dd amount continued.

cottager

td_007 wrote: »

There is nothing to stop you from calling them in between review period to check on the credit/debit balance and if you have a credit then you can ask that it be refunded. So also, if the a/c is in debit then you can also make a one-off payment. At my last review, when the dd amount was increased by £10, I called to find that the a/c was in debit. I paid it off over the phone and the original dd amount continued.

Thanks td, yes I do that now and again, but they generally seem pretty pedantic about the DD amount they consider should be paid every month. They've adjusted it down a few times over the years if requested to, but seem to drop in phrases along the lines of 'we'll do it on this occasion' as if it's a favour or concession they don't really go along with (this when we might be something like 150-200 quid in credit)

alex69

Sorry I could not reply earlier. Thanks for all the replies.

The DD in question was incorrectly taken. My understanding after having spoken to the supplier is that after two consequent three-montlhy adjustment (with meter reading) that result in credit (ie a credit that lasts for over 6 months) an automatic recalculation (ie reduction) of the monthly charge has to be carried out. Additionally the credit needs to be posted back by cheque to the customer. None of these things happened, and npower were happily using me as their lender at no cost.

So I do think that according to the contract the charge made was incorrect (ie it was the wrong amount). It may be incorrect to say no monthly payment was due at all. A payment was due like any other month but at the same time a cheque should have been issued of higher value of the monthly payment itself. In the past I've sorted out with the supplier to skip a month's payment making it easier for everyone (and cheaper for the supplier as it saves them the costs of issuing the cheque).

I think all this is beside the point.

For the reasons explained I do think the amount collected was incorrect. I may be wrong, but I think there was a mistake at the very least in the amount collected. I told my bank that I think there is a mistake. Under my reading of the DD terms they should have refunded the money- no question asked. If the supplier would like to pursue this after a charge back, that's fine, we could have debated the matter later as it's been said on the forum too.

I am too busy now but will pursue with the ombudsman in March.

Thanks for all replies.

premierfella

Financial ombudsman service? I really wouldn't if I was in your position.

I posted #2 above. My answer was based on an error being made in terms of the direct debit payments being collected.

That said (and since you raise the point of principle) I suspect it is very unusual for a utility company such as this not to comply with the direct debit guarantee by providing a bill showing the amount to be debited prior to the direct debit payment being made (or alternatively collecting only the ongoing fixed monthly payments as previously agreed).

Perhaps I didn't explain my opinion fully enough. It now sounds as though we ARE talking about regular payments (I am unclear as to whether these were fixed amounts and whether they were taken monthly or quarterly), and that this was not some sort of extraordinary payment claimed.

For most banks "error" means you or the DD originator advising them that there has been an error - this instigates an immediate refund under the direct debit guarantee (a refund which can be reversed if after investigation it is proved that no error was made).

Co-op Bank seem to have a stricter policy: for them, "error" means that the originator or Co-op Bank themselves states that they have made an error - this certainly lowers my opinion of them. It is in keeping with the letter rather than the spirit of the direct debit guarantee (who knows, maybe they will rethink their position if enough customers complain?!).

I think it is unlikely that the ombudsman will take your view that the "error" as you describe is the same as the meaning of "error" that would be covered by the guarantee as the payment that was made was an ongoing regular payment that had been previously advised. An error as per the direct debit guarantee would have been made if they had recalculated your payments and then not changed the amount of the payment claimed under the direct debit.

Think of it this way. If the "automatic recalculation" after six months resulted in them needing to increase the direct debit payments, they would have to write to you to advise you of the new payment plan. Technically (as I understand it) the same would have to happen if they wanted to reduce the payments, even if the reduction was instigated as per the situation you described, as it is a change to the agreed payment plan. Without the written advice from them, or you advising the company that you required a change to the payments, the payments claimed under the direct debit validly remain unchanged.

alex69

premierfella wrote: »

Co-op Bank seem to have a stricter policy: for them, "error" means that the originator or Co-op Bank themselves states that they have made an error - this certainly lowers my opinion of them. It is in keeping with the letter rather than the spirit of the direct debit guarantee (who knows, maybe they will rethink their position if enough customers complain?!).

So in other words they implement it such that if the originator state they have made an error than they will refund the money. However no originator will state they made an error without refunding the money. So there is no need for the bank to take action. In fact, the "guarantee" is not guaranteeing against anything at all as the originators would be making these refunds themselves.

I think there is two issues that should not be confused. It may be that my belief that the full DD collection was a mistake is itself erroneous. That may be because, as you say, a revised DD should've been agreed beforehand before a revised amount (eg nil) can be actioned. I personally do not believe this is necessary because of variable DDs are executed in practice and the contractual obligations on on npower to modify the amount. But that's beside the point.

What matters here is that the bank in question is not processing clients' requests for DD refunds unless the originator says they were made in error. In my view this does not adhere neither to letter nor to the spirit of the DD terms. It's obvious it does not. For example if I were to sign a DD instruction with some Dodgy Jim for 30pounds a month and the first collection were 300pounds smile would not refund me of the money without Dodgy Jim saying they shouldn't have got 300pounds in the first place; and if this were not forthcoming all I'd be left with would be recourse via other means.

premierfella

alex69 wrote: »

I think there is two issues that should not be confused. It may be that my belief that the full DD collection was a mistake is itself erroneous. That may be because, as you say, a revised DD should've been agreed beforehand before a revised amount (eg nil) can be actioned. I personally do not believe this is necessary because of variable DDs are executed in practice and the contractual obligations on on npower to modify the amount. But that's beside the point.

Variable based on preadvice of the amount though. As you say, an aside in this case.

alex69 wrote: »

What matters here is that the bank in question is not processing clients' requests for DD refunds unless the originator says they were made in error. In my view this does not adhere neither to letter nor to the spirit of the DD terms. It's obvious it does not. For example if I were to sign a DD instruction with some Dodgy Jim for 30pounds a month and the first collection were 300pounds smile would not refund me of the money without Dodgy Jim saying they shouldn't have got 300pounds in the first place; and if this were not forthcoming all I'd be left with would be recourse via other means.

Don't get me wrong - I think the way the Co-op appear to be applying it in practice stinks (if this is their policy as others appear to have stated).

The letter of the guarantee is clear though. The bank remain compliant with the guarantee if no error has been made, because they only have to guarantee to refund immediately if there has been an error:

"If an error is made in the payment of your Direct Debit, by the organisation or your bank or building society, you are entitled to a full and immediate refund of the amount paid from your bank or building society."

One must assume that if you go into a branch with hard evidence of an obvious error, they will comply with the guarantee (although I have my doubts if their policy requires referral to the originator before actioning a refund). In this situation I again assume they would be happy to pay some form of compensation/goodwill later - this is no doubt cheaper than the losses incurred by other banks paying out under the guarantee without reimbursement from the originator (fraud, etc).