Loan charge can I do anything about it?

Pigmyhippo

Hi, just after a bit of advice please.

My wife works for South Tyneside council, and she along with about 5999 others were not paid yesterday as expected.

We have direct debits set out to come out on the first of the month, as her payday is the last working day of the month.

We were told that she would be paid today, and happily that has happened. However, upon calling the bank to explain the situation yesterday, the bank advised us that the debits would end up being taken before the credits, (eg direct debits at midnight on 1st, pay received at 2am on 1st). The bank said that if this happened, we would face bank charges for failed direct debits. There was enough in account to cover majority of direct debits, but we still had to cancel 2, as money that I could have transferred over would not have reached account until this afternoon

At 9am this morning, I called the 2 firms to apologise for cancelling the direct debit, make a payment and reinstate the direct debits going forward.

A firm who we have a car loan with informed me that even though I was calling to make a payment on time, that because the direct debit would be returned to their system as cancelled tomorrow I would be charged for that. She was unwilling to waive the charge so I informed her that I would call back later today to make a payment.

The charge is only for £12 so not a massive amount of money but it seems to me that it is a pretty unfair situation, when the loan company are in no way out of pocket and they received their payment on time with a debit card. It is an entirely automated system whereby computer requests DD, computer is told DD is cancelled, and computer would then instruct agent to chase up missed payment. I cannot see how a £12 charge is proportional to this.

I have tried to mitigate any charges we would have received, but seems that this situation was a no win. If I leave the direct debit in place, I am charged by the bank, if I cancel the direct debit and call to make an on time payment, I am charged by the company.

Are there any rules being broken in this situation, or should I just suck up the £12 charge and move on?

mjm3346

It would be reasonable for the employers to cover any charges, extra interest incurred etc. would have expected them to offer when they knew the payments were going to be late.

amersall

Cannot believe this, 2 hours difference in the early hours should not cause any problems, the D/D shows and then the credit comes in, don't know why the bank told you this or is that how your bank works?.

I am with Yorkshire bank and have at times, D/D showing out and a minus balance but the credit gets made the same day and I have never had charges.
You should not have cancelled the D/Ds, I think the bank was wrong with the info they gave you.

Pigmyhippo

Thank you for that advice mjm. I also assume that the employer would probably need to cover the charges, however, I just thought by taking action, we could have avoided either ourselves, or the employer incurring any charges at all.

I think for the sake of the £12 I will just pay the charge and not bother reclaiming it. The other company was fine with the situation, and did not levy a charge at all. I'd imagine that the charge was included in the contract list of charges, so nothing I can do.

Thanks again for your help though

Pigmyhippo

I am with the Halifax, and that is what happens with them.
I know that Lloyds also have in place that if you credit cash before midday on the day a direct debit is due that there will be no charges against the account, but Halifax definitely do, as I learned to my cost a couple of years ago. It doesn't matter if it is only an hour, you are still charged.

amersall

Sorry, just realised, you did the right thing re cancelling as you were not to know the wage would have been there the next day.

Vikipollard

When this happened to me (many MANY moons ago), the employer contacted our banks and told them about their error.


The banks then allowed all the payments to be processed and reclaimed the charges the employees would have faced from the employer.


That said, there were only about 50 staff involved and the majority used local banks!

Bantex_2

When I used to be paid monthly, I never set up DDs for the 1st. Best to leave a little leeway.

jonesMUFCforever

I agree always better to have a couple of days grace between money going in and the majority of direct debits going out.


I think that if d/d's are going out of your account you normally get until 3.30 to pay in that day - so in this case you would not have had to cancel any payments.
I agree the council should pay any expenses.
Maybe this is a lightbulb moment whereby you should try and save one month's payments as a buffer to prevent anything like this again.

Pigmyhippo

No, you definitely don't get that grace period with the Halifax. If the cash isn't there, you get charged, so had to cancel the DD's.
In terms of changing DD dates, that may be an option going forward.
As I have stated though, it isn't so much about the charges, more about the fact that a company thinks that a reasonable charge for doing absolutely nothing is £12. (Plus another £1.50 charge for paying by debit card on top).

I've paid the charge anyway though, and won't bother reclaiming it from the council.

As for it being a lightbulb moment, not really. Usually there is more than sufficient in the current account to pay bills, however unfortunately had the balance of a holiday to pay to virgin holidays 3 days earlier, so not as much as usual in there. Also I couldn't have transferred cash across from my other account as the bank does not offer a faster payment service, so wouldn't have reached the account until the next afternoon.

Thank you all for all your advice though.

Gaz83

Thing about the grace period is that not every company allows you to change the date a direct debit comes out of your account, so it's not always as easy as saying take it out on the 2nd or 3rd rather than the 1st.