reversing on Nationwide Switching service causing unpaid direct debit notices

w81

Hi all,

I've got a bit of a problem that I would be interested in airing with other forum members, for advice, and to let others know what can happen.

Basically this is about problems that have occurred after I carried out a bank switching service to move direct debits to a new current account, later reversing on that decision, then finding that each direct debit failed causing problems with several credit card companies, fees/charges, loss of promotional 0%, and maybe even impact on credit files. My account is in good standing, not in an overdraft, but my decision to revert my current account seems to have created the perfect storm, despite being precautious about having good communication with companies.


Background to the problem:

• At the beginning of May, the 8th, after many years, I looked to move my main current account from Santander to a new FlexDirect account with Nationwide, using their account switching service to migrate direct debits for me.
• A week later (15th) I discovered that I would get no overdraft or promotional interest rates with them, and I was not much better off, for all the upheaval and hassle. So I decided against moving bank, and being concerned that the account switching service was possibly still going on, I tentatively rang around all of my direct debits, explained the situation and asked them to disregard the new direct debit information, and instead go back to my old one (in all of the cases they recommended the easiest solution to set up a brand new direct debit with them over the phone). Some advised that the change may not be reflected by time next payment due and I dealt with these by card payment over the phone. (That's five credit card companies btw folks)
• First sign of trouble: letter from Halifax on the 1st about direct debit payment being returned by bank. Reason shown is "account transferred". I immediately phoned them and spoke to a nice lady who could see that I rang them on the 15th to confirm direct debit details, and says that she thinks that something on the system cancelled the direct debit. She offers to refund the late payment fees (2 x £12), and to reinstate my promotional rate (!!), and that they would wipe clean any bad records from this on my credit file (!!!) - which I was obviously very grateful for over the phone. She checked the direct debit details were correct (setting up a new direct debit).
• Now being concerned, I rang around all the other companies the same day, explaining situation, to check that direct debits were still in place and set up as they should be. All confirming okay, and that my instructions on the 15th still in place.
• Next up Tesco bank collections team, rang up on 10th advising that a direct debit payment gone unpaid. Said that I had confirmed my details on the 1st and they were instantly sorry that there had been a mistake and a system error has been the cause. Late payment fee refunded, promo rate unaffected, and any detrimental effects to credit file remedied upon my instruction. Check direct debit details once again.
• Finally, letter from MBNA sat 15th, about unpaid Direct Debit request. These guys are less accommodating, the guy on the phone said that all he could see was that the direct debit had been setup properly, and that was the account which had had the direct debit applied on the 9th but was refused by bank, so an issue with my bank account. Will be losing promo rate, but told to ring a number in the week.
• I wanted to get to bottom of this, so rang up Santander for a change. Turns out that Santander had a 'Cancellation notice' put against all of these direct debit references so that they would never go through. Asked for details about this but, otherwise helpful girl, did not have this available but explained that this did come up quite a bit where customers look to reinstate a direct debit with them, and she said that it's such a simple thing for companies to check but that they don't. She looked at my account and saw the five direct debits with 'cancelled' flags, and reinstated these for me. The final advice was for me to ring around and let companies know that the direct debits should now work.
• So I thought that maybe I now had something which could be explained with MBNA. Ringing them up, I got another very helpful and efficient representative who was happy to look into it, but set out very early and strongly that this was not a fault of MBNA that they are provided with sort codes and account numbers only when setting up a direct debit, and if my bank refused then this was up to me. She confirmed that my account would revert to standard rates (20.9%/18.9%), but looking into my account standing said that she could offer me a reduced rate of 1.9% but fees would still stand for late payment. Thanking her for this, I confirmed that I would accept the offer although I still was not in agreement that I was at fault over this.
• I rang around all of the other companies, to please ask them to note that I had had a banking problem but it was now sorted out and the direct debits shoudl go through (and do you think the system would check for notes before slapping on a non-payment fine??). This uncovered that my Natwest account had just experienced a non-payment on 10th June which I had not yet been contacted about. I explained the situation and told to ring a number in the week, to see that if my account in good standing and this "the first time" they could reinstate my promo rate.

So what do I think about this? Well doing some preliminary searching online about the account switching process, this page lists the process according to bacs, and shows that there are a couple of places where the new bank and the credit card companies can send instructions to the old bank to cancel the direct debits. This page explains a change to the process in 2013 and strong advice for companies to review their processes (useful for the terminology and mapping it out on paper). And from this it looks like the cancellation block at Santander was put in place either by Nationwide, or by the credit card companies themselves via an '0C' transaction.

I gave Santander a final call to see if I could gleam any extra information about where this cancellation code had come from. The guy couldn't get me any further info, but made a request to the back office for details about "when and by whom the cancellation blocks had been applied", and I should hear back early next week. But he did say that the only person who could do this was either myself or the credit card company (contrary to the above).


The thing I think is unfair I suppose is that all of this info is all of this is inside knowledge. When I spoke to the credit card companies and explained the situation about reverting back to my original bank following using an account switching service, rather than just offering to re-setup direct debits they could have done with providing me with this inside knowledge by telling me to also speak to my bank. Or if those companies had placed the cancellation block themselves, then their systems could have flagged it up when they were entering my account details. Or when those companies that had first detected the problem had heard my background they could have raised this with me as the cause instead of just putting the direct debit through again.

I intend to speak to MBNA and Natwest and see if they can see that I tried to go through the process diligently and as best as I could with the information I had. It is an absolutely pain that they post these unpaid direct debit notices so easily without checking your account for these so-called notes and recordings they make. One of my debts is £6000, and if this reverted to 20% from the 0% until end of April 14 rate I am currently on, this is going to set back my repayment schedule considerably, and applying for new credit to balance transfer is probably not an option. I know that I have a lot of credit cards but this was my plan to keep my head down over the next 5-years to pay my debt off.

Any thoughts from other members greatly appreciated no matter how reproachful!

Thanks, Will


Lessons for others

• Think carefully about using a direct debit switching service, in my opinion you'd be best doing this yourself with some forward planning.
• If you later decided against the switch make sure you get back in touch with your original bank as well as your credit card companies
• Make a note of absolutely every bit of correspondence with dates and names
• Don't have so many credit card companies

pinkdalek

You should have let the transfer process go through as normal, that way if there was any problems it was Nationwide's problem rather than yours. Then switch back when done.

If your initial problem was because they could not give you the overdraft you should have complained to them about this if they could not resolve your complaint then a solution may have been for them to cancel and reverse the switching process. Yet surely the overdraft situation would have been explained to you at application, so if it was not offered at that point why continue?

It may be through your own intervention that you have caused yourself more hassle and inconvenience.

ses6jwg

It was your own fault for trying to reverse it.

System

OP could you not have paid all via Faster Payments?

It's been my experience that companies are not too fussed about an occasional Direct Debit hiccup if you pay by other means.

pqrdef

will.moindrot wrote: »

She looked at my account and saw the five direct debits with 'cancelled' flags, and reinstated these for me.

What about the new ones? You said that when you first phoned the payees, they set up new DDs. These should be distinct from the old ones.

I believe Nationwide will have cancelled the old DDs after the switching date. It's not the best idea, but it should have been harmless.

If MBNA tried to collect on the old mandate after the switching date, which seems unlikely, they were proabbly in the wrong.

If the new DDs got cancelled, this probably has something to do with the banks phasing in the new system, and is the sort of !!!!-up that I suppose we must now expect.

pqrdef

pinkdalek wrote: »

If your initial problem was because they could not give you the overdraft you should have complained to them about this if they could not resolve your complaint then a solution may have been for them to cancel and reverse the switching process. Yet surely the overdraft situation would have been explained to you at application, so if it was not offered at that point why continue?

FlexDirect is a lottery. The way they're working it, you have to commit yourself before Nationwide commit themselves on incentives. And yet the incentives are the only reason to open the account. If you're not going to get any, you want a FlexAccount instead, or neither. So it's inevitable that people will change their minds.

And they may be in a hurry. With Halifax Reward, for instance, you now have to have two DDs in place "at all times", or they can downgrade the account. Switching and reinstating may not be an option.

Notice how the banks are scheming to ensure that switching continues to be a hazardous process, in spite of the new system.

At least, with the old system, although you have to micromanage the switch, you can shack up with the new bank while still married to the old one, and if things don't work out, you can go back. With the new system, you'll probably have to burn your bridges with the old bank before you find out whether you can get on with the new one.

w81

pinkdalek wrote: »

Yet surely the overdraft situation would have been explained to you at application, so if it was not offered at that point why continue?

It may be through your own intervention that you have caused yourself more hassle and inconvenience.

No the application process was pretty unclear on the point of success in getting an overdraft or the promo rate. The information was absent, rather than saying specifically that there was no interest (an no benefits) of the FlexDirect.

I agree with the top commenter that I should have probably just got Nationwide/Santander to do the donkeywork. Having said that, the switching guarantee by banks seem to only guarantee from bank charges, not loss of promo rates and charges by 3rd companies.

w81

Heng_Leng wrote: »

OP could you not have paid all via Faster Payments?

It's been my experience that companies are not too fussed about an occasional Direct Debit hiccup if you pay by other means.

Yeah I have paid by faster payments once I have been alerted to failed direct debit, but from my experience it seems like the companies are only to quick to move account to standard rates from promo. I suppose unsurprisingly, but given that I have contacted each one a few times checking things are ok I would have thought that could have been used in assessing the direct debit failure.

w81

pqrdef wrote: »

What about the new ones? You said that when you first phoned the payees, they set up new DDs. These should be distinct from the old ones.

If MBNA tried to collect on the old mandate after the switching date, which seems unlikely, they were proabbly in the wrong.

If the new DDs got cancelled, this probably has something to do with the banks phasing in the new system, and is the sort of !!!!-up that I suppose we must now expect.

Hi, thanks for this.

You probably know more about this than me, but from what Santander said over the phone, it sounds like the direct debit reference is what identifies the direct debit (probably credit card number). If it was re-set up with a new mandate created, from what Sant said I don't think there would be any change to this information and it would be already blocked.

In any case, I think I'm getting too involved in this. I intend to speak/write to the companies in the week and hopefully they would be able to be more receptive than the weekend staff. I'm not outraged by this, as it is a situation of my own making, but this duplicate notice of cancellation sent out by credit card co's and the new bank is problematic in this case.

JuicyJesus

pqrdef wrote: »

Notice how the banks are scheming to ensure that switching continues to be a hazardous process, in spite of the new system.

1. Nationwide is a building society, not a bank.

2. It's only "hazardous" if you want the extra incentives as your sole reason for switching, not to actually move your banking facilities, or decide halfway you want everything to be reversed.

3. If you're going to switch things a*se backwards by informing the people who don't have anything to do with collecting the DDs, rather than the people who set them up, and then interrupt the process halfway, unsurprisingly things can go wrong.

The new system from September-ish should make things a hell of a lot easier in this regard. Although I'm still not sure if it'll have any mechanism for reversing a switch once it starts given the redirection aspect.

innovate

I admit I did not read the OP word for word but it appears to me that the OP asked Nationwide to switch a current account. Nationwide duely went about transferring the DDs.

When the OP then had a change of heart, they told everyone but Nationwide.

Surprise surprise this ended up in chaos.