Direct Debit System Totally Flawed - Any Advice Please

Dydie

Hi Everyone

Completely :mad: with Bank and it's pathetic excuses

Has anyone else noticed how flawed the entire Direct Debit system is?

3 Months ago I cancelled a DD both with my bank and with the payee - however for the past 3 months I have still had this money leave my account, on one occassion it left me utterly pennyless and unable to get fuel to get home from work! the bank have been utterly un-sympathetic and although they return the DD it takes 24 hours to get back into my available funds.

All I keep getting from the bank is that they are only a 3rd party and the agreement is between me and the payee .... I Have cancelled with the payee, I don't have any further control over them continuing to ask for the payments but surely I should have control over my own bank account?

Its MY money, MY account, why is MY instruction to the bank not worth more than a 3rd party payee requesting money?

They have done it again today with a different payee - this time my car insurance which ended 3 months ago - I told the company I did not wish to renew with them because it was too expensive and got insurance from a different company - I cancelled the DD with my bank (3 months ago) and today out of the blue they have paid out £54.08 leaving me overdrawn!

That's another question - I have a basic bank account that does not allow overdraft's so why are they even paying a direct debit which takes me overdrawn?

This whole DD system is failing - it seems if at some point in history I have given you my account details then you can just take money willy nilly from my account without my authorisation and even when I cancel the DD the bank will ignore my instruction and give it to you anyway :mad:

Any thoughts or advice anyone ??

dtsazza

It sounds like it's your bank that's failing.

The Direct Debit Guarantee (which they're required to provide you with every time you set up a DD - can be tedious at times) states that you should receive a full and immediate refund of any amount paid in error, i.e. outside your instructions.

Since you've cancelled the DD, the bank should immediately refund the money to your account, and then can do their own investigation to sort out the originator's side.

I'd call your bank again and remind them of the terms of the Guarantee, asking for immediate refund. That's what fundamentally makes the DD system solid, so overlooking it would indeed lead to a flawed system.

premierfella

Name and shame.... and then switch banks.

Direct debits with most of the big names (and many smaller ones) are now established at the company end rather than the bank end. This can potentially lead to the situation that you have found.

As far as I'm aware, most banks have systems in place that are clever enough to flag up the direct debit instruction when companies re-establish previously cancelled instructions (either so that they can simply reject them automatically or contact you to check if the new instruction is valid).

pqrdef

The situation to be wary of is when the terms of your contract with the merchant stipulate that the merchant can take money owed by DD.

In that case, you lose control - it's almost as bad as a continuous payment authority on a card.

No use telling the firm not to take any more payments - if they claim that they're owed money, by their interpretation, then they say the T&C allows them to ignore you and carry on taking the payments.

Worse, they'll say that the contract allows them to reinstate the DD mandate every time you remove it at the bank end.


However, when a merchant sets up a DD mandate, the instruction is actually from you and on your authority - the merchant merely relays it. So in principle I don't see why you can't tell the bank that you've withdrawn that authority permanently and any attempt to reinstate the mandate is without your permission - though they'll say it's all automated and they haven't any mechanism. I certainly don't see that the bank has any obligation at all to the merchant.

Dydie

Thanks everyone, its Natwest - after writing my post I checked the DD guarantee online and saw the full and immediate refund statement so I called them back and complained again, they said it is impossible to refund immediately as their system updates overnight but they did arrange for me to collect some cash at my local branch.

Again they said the fault was with the payee (not themselves) as they are obliged to pay the DD request as it is interpreted that I owe them money as pqrdef states above !! I find this very frustrating as basically it appears anyone with my bank details can request money despite me not authorising it - Natwest even confirmed that the car insurance was a new DD request with a different referance number - I can't understand how this can be set up without my authorisation, Natwest says they can't possibly check with everyone as they have millions of new DD's set up every day and that I should just check my online banking everyday for any changes!

I don't even have a valid contract with the insurance company as my policy and original contract has now come to an end.

The other payee who keeps requesting money is the dreaded CSA - I have cancelled 5 times now and my bank still keeps paying them, I finally managed to speak to someone with a brain cell at the CSA who told me their system automatically requests the money until they put a closure on the account, This closure has now been put on the account so fingers crossed it won't happen again and as it turns out the CSA owe us money - I bet they won't be as quick paying it back as they are to keep taking it!

It just seems like a big loop hole in the system that needs to be filled somehow - the old paper system seems safer as you physically need to sign your agreement

jonesMUFCforever

As there are two sides to every argument can I add my 2p worth - the bank may well have cancelled the direct debit as instructed only for the company to start it up again under AUDISS - no signature required!
Are they supposed to do this - no will anybody take any notice - no.

OP - do you actually owe any premiums/money to these organisations - if the answer is yes then you need to sort this out.
If not then write to the CEO of each organisation debiting your account telling them what is going on.

pqrdef

Dydie wrote: »

Again they said the fault was with the payee (not themselves) as they are obliged to pay the DD request as it is interpreted that I owe them money

Rubbish. A debit card payment can be guaranteed, because the bank makes itself party to that by issuing the card. A DD is never guaranteed. The bank has to pay it only if it appears to them that you have instructed them to pay it. They have no obligation to the merchant, and your arrangements with the merchant are no concern of theirs, certainly not theirs to enforce.

Dydie wrote: »

I find this very frustrating as basically it appears anyone with my bank details can request money despite me not authorising it

On the form it usually says that you agree to the merchant retaining the paper form and passing the instruction to the bank electronically.

The trouble starts when they take this as authority to do that more than once. Sometimes I think about inserting the words "once only" on the form. Then they might be in the wrong if they try to reinstate the DD after I've removed it

Dydie wrote: »

Natwest says they can't possibly check with everyone as they have millions of new DD's set up every day and that I should just check my online banking everyday for any changes!

Well that's an idea that needs to be resisted. They ought at least to send an email when setting up a DD. Though we should also resist the idea that people are responsible for checking their emails continually.

Dydie wrote: »

I don't even have a valid contract with the insurance company as my policy and original contract has now come to an end.

There was probably something in it that said it would be renewed automatically unless cancelled.

It's getting to the point where you can't just stop a DD mandate, you have to send the company a letter a month in advance by recorded delivery to cancel anything. And even that might not work, if they say they've got T&C on their side.

DDs are becoming dangerous, and the much-vaunted guarantee isn't worth much. It certainly doesn't guarantee to get your money back.

Dydie

No don't owe them a penny, the CSA owe us as they have been claiming for several months past the childs 19th birthday and the car insurance had finished (without oweing any premiums) and I chose not to accept their renewal offer as it was too expensive.

The bank has always recalled the payments but its the hassle and time and inconvienience of sorting it out, I am in a difficult financial situation at present and budgeting every penny so it really leaves me in a pickle with this keep on happening, it doesn't seem right or fair that this can happen

Dydie

pqrdef wrote: »

DDs are becoming dangerous, and the much-vaunted guarantee isn't worth much. It certainly doesn't guarantee to get your money back.

Couldn't agree more after recent events, I am going to think twice in future before paying by DD

Thanks for all your thoughts and advice

wealdroam

OP, I'll ignore the CSA problem and concentrate on your insurance issue.

You have mentioned three times that somehow your insurance has come to an end...

Dydie wrote: »

...this time my car insurance which ended 3 months ago - I told the company I did not wish to renew with them because it was too expensive and got insurance from a different company...

Dydie wrote: »

I don't even have a valid contract with the insurance company as my policy and original contract has now come to an end.

Dydie wrote: »

...and the car insurance had finished (without oweing any premiums) and I chose not to accept their renewal offer as it was too expensive.

Forgive me for saying this, but all those statements are a bit vague.
Nowhere do you say that you have cancelled the policy.
Unfortunately these days it is usually necessary to write to the insurance company making sure that the word cancelled is used.

"Choosing not to accept their renewal offer" and "original contract has come to an end" are phrases which will allow an insurance company to assume they can continue taking money from you.

Sadly that's the way it is.

Twister84

You should start using online banking - excellent tool for monitoring Direct Debits at your fingertips!