Direct Debit Guarantee in case of dispute

dalesrider

YoungNick wrote: »

Under the direct debit guarantee, your bank must make an instant refund if you say that a direct debit was not authorised by you. The bank is not entitled to ask you any questions

OF course the bank has every right to ask questions as to why....

Failure of doing so could lead to a failure of procedure and the bank being fined by FOS. (Failure of procedure is a serious issue)

Funny how people (that do not work in banks) think that a bank should simply do what the customer wants with no question....

If they did this no company would take any form of payment other than cash.

Procedures have been put in place by the governing bodies to protect ALL parties.

Nice to see the Op thanked this post, yet has not thanked Hazzanet who fully knows their stuff :cool:

A case of wanting to hear what they want to hear and not the correct advice.

6am

meer53 wrote: »

If you had cancelled your policy before the Direct Debit was claimed, you should have cancelled the direct debit at that time. The bank cannot do this for you. They have not made an error, you have.

The bank staff don't need t have any more training, they asked the correct questions. If you had cancelled the direct debit in the first place, this wouldn't have happened.

As far as I know there is no obligation to cancel DD and I rarely cancel them. Therefore I did not make an error. The bank did not make an error either. The insurance company made a mistake.

I believe the bank staff needs more training. I did not mention this before but they said I should contact insurance company to get my money back. According to previously mentioned article http://www.financial-ombudsman.org.uk/publications/ombudsman-news/27/27-directdebit-guarantee.htm they should not ask me to contact the originating company for a refund. It highlights poor training.

System

Hazzanet wrote: »

6. If counterclaim is raised & successful, the DDIC is reversed and reclaimed from the Payer's bank account (i.e. just put back in the Suspense Account).

By what right does which bank purport to be entitled to determine whether the counterclaim should succeed?

6am

dalesrider wrote: »

Nice to see the Op thanked this post, yet has not thanked Hazzanet who fully knows their stuff :cool:

A case of wanting to hear what they want to hear and not the correct advice.

My bad I thanked Hazzanet as well. To be fair YoungNick inserted a couple of links to reputable sources (I hope ombudsman is a reputable source) and for that reason I thanked posts.

6am

Hazzanet wrote: »

6. If counterclaim is raised & successful, the DDIC is reversed and reclaimed from the Payer's bank account (i.e. just put back in the Suspense Account).
7. If counterclaim is raised & unsuccessful, the DDIC proceeds, funds are collected on the stated date and put back into the bank's suspense account.
8. If no counterclaim is made, the DDIC proceeds, funds are collected on the stated date and put back into the bank's suspense account.

What happens after that? I was under illusion that dd guarantee provides protection for the payer. But according to you the payer is at mercy of originator's bank. If originator's bank refuses the payment then the only option for the payer is to sue the company. Is that right?

Hazzanet

YoungNick wrote: »

By what right does which bank purport to be entitled to determine whether the counterclaim should succeed?

There are only six instances where a Service User can make a counterclaim. Five of those cover technicalities where the paying bank has made an error, the sixth is as follows:

6. AUDDIS service users only. Where a paying bank has raised an indemnity claim with a reason ‘payer disputes having given authority’ and the service user can either produce a
valid instruction (e.g. one retained by the service user in accordance with the AUDDIS requirements) or establish that one has in fact already been provided and that all other requirements have been complied with, a counter claim may be raised. A DDI shall not be regarded for this purpose as valid if the paying bank has been unable to establish the validity of the DDI with the payer or the payer asserts that the DDI was given as a result of mistake or misrepresentation. In such cases the service user would be required to liaise directly with the payer.

Where a counter claim has been raised, the sponsor will respond within one month, confirming acceptance or rejection of the claim. The paying bank will either reject e.g. provide proof that an ADDACS or paper cancellation advice has been sent or settle the counter claim within 90 days of the claim being forwarded by the sponsor.

Finally:

NB – The counter claim is not the only route open to the service user. The service user retains its right to take action directly against the payer. Direct Debit is the method of collecting
payments and the banks are not responsible for any underlying contract between the service user and the payer.

In addition to the counter claim process, indemnity claims raised via the automated route may be ‘challenged’ prior to settlement subject to the criteria and timescales referred to in section
11.4.

It would appear that the Sponsoring Bank (i.e. the Service User's Sponsor) mediates in those situations.

Hazzanet

6am wrote: »

I said I requested the money via DD guarantee and am not sure what do to with their cheques. They do not know either. I am going to wait for a month and if money are successfully refuned via DD guarantee I will destroy cheques and notify the company.

I would just return the cheques to them if/when your claim is successful.

Hazzanet

The cases for a counterclaim/challenge are extremely restrictive, as the banks wouldn't want to make them open-ended for fear of undermining confidence in the DD Guarantee.

The only time I really see successful challenges is where we've picked up the paying bank on a technicality (where the paying bank foots the bill) or where a payer has challenged giving authority and we've been able to supply a copy of a signed mandate.

In 6am's scenario, the 'manual' says

If the payer approaches the service user direct regarding an error, the service user must refer the payer to the paying bank or contact the paying bank asking them to raise an indemnity claim.

chanz4

have you paid for the time on cover?

Hazzanet

6am wrote: »

As far as I know there is no obligation to cancel DD and I rarely cancel them. Therefore I did not make an error. The bank did not make an error either. The insurance company made a mistake.

This is true...

but unfortunately c0ck-ups regularly occur through poor staff training, failure to follow procedures and general malaise so there's no harm in being proactive and cancelling it which helps prevent situations such as these from occurring.