Direct debit refund refused!?

jambosans

premierfella wrote: »

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."

However second half of the paragraph you've quoted states:-

– If you receive a refund you are not entitled to, you must pay it back when the organisation asks you to

Now vague wording aside, this does suggest that either the bank or originator will investigate any refunded monies to confirm the aforementioned error.

premierfella wrote: »

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).

Claims under the Direct Debit Guarantee are two fold. Firstly the customer is refunded after being advised of error (this is obviously the vague bit). Secondly the originator indemnifies the bank for the error amount. The originator either upholds the indemnity (and reimburse the bank) or refutes the indemnity (with the bank subsequently debiting the original refund). The bank is only out of pocket whilst awaiting a response from the originator.

Now vagaries aside, the bank must ultimately request indemnity from the originator to confirm the error, hence why normal practice IME is for most banks to provide an immediate refund with few questions asked. Now Co-Op may have a policy in place to mitigate the risk of unsuccessful indemnities, but I don't think this (as you've said) is within the spirit of the Guarantee.

Although admittedly as you have suggested, the "spirit" of the Guarantee is not something the FOS will consider.

BTW I'm not disagreeing with you, I'm just highlighting how the Guarantee is understood (and actually works), and the Co-Op's slightly pedantic approach.

alex69

Thanks, appreciated.
I will file the complaint during the weekend and will write to Moneybox.

In parallel to this I am in the process of changing bank in the meantime.

liam8282

There is a lot of talk about the banks being pedantic etc in this thread, but I think the OP is a fair bit pedantic themselves.

Why not save yourself all the hassle and just get the amount your account is in credit refunded direct from NPower, one phone call (probably) and everything solved.

alex69

I did already and got the money refunded.

As I stated I am not worried about NPower. I am worried about the consequences about the whole of the DD scheme being completely useless for customers.

agsnu

jambosans wrote: »

Secondly the bank indemnifies the originator for the error amount.

i might be picking nits, but I think it's the originator that indemnifies the bank, not the other way around.