Direct Debit Guarantee Refund

blackaqua

Just looking for some opinions, as I can't see anything in the past 5 years on a search.

I had a direct debit taken in error, as the payment had already been made manually. This put me from credit into an unarranged overdraft smack bang in the middle of a mortgage application. The company acknowledged this and suggested the DD guarantee route, which would be quicker than their refund.

The guarantee is pretty clear that:

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

The bank (HSBC) refunded money the next working day (saying it would take 1-5 days to do so). Anyhow, bank refused that this should be immediate. Submitted complaint to financial ombudsman who have sided with the bank, concluding that they followed their internal processes correctly.

My interpretation of the DD guarantee is immediate would be on the phone or within the 2 hours faster payment, then the bank would follow up and investigate to check it was legit.

I had thought the ombudsman would be a bit more transparent and reference the DD scheme rather than state the bank followed their process?

Flobberchops

It's possibly a bit ambiguous but in this context the word "immediate" means "without delay/as fast as possible" rather than "instantaneous". Moving money between internal and customer accounts sometimes has a processing time, or a daily cut-off. I'm not sure why, that's a technical issue few will be able to answer (probably to do with manual checks and authorisations), but that honestly is just the way things work.

Either way, you are in effect getting the money refunded up-front, before the bank contacts the DD originator and comes to a verdict about the validity of your claim, so even after the bank's initial timescale to refund you could potentially still have the refund taken from you (for example if the company disputes it). If receiving the disputed money *immediately* was of paramount importance to you, like if it was the difference between your children going hungry that night or being able to buy food, at the bank's discretion they may have been able to give you an on-the-spot credit from a sundry account. By all accounts though, the bank took your claim seriously and actioned it straight away, so I'm not surprised the FoS sided with them.

Shakin_Steve

Have I got this right? You paid a company yourself before the direct debit was due, but that company still requested the money from your bank? If this is the case, then it’s the company that’s at fault, not the bank. Either you or they should have cancelled the dd.

PeacefulWaters

Shakin_Steve wrote: »

Have I got this right? You paid a company yourself before the direct debit was due, but that company still requested the money from your bank? If this is the case, then it’s the company that’s at fault, not the bank. Either you or they should have cancelled the dd.

The company isn't necessarily at fault. Especially if the lead in time for requesting the DD is already under way.

agrinnall

Next working day is in line with the Payment Services Regulations 2017. See clause 86.

https://www.legislation.gov.uk/uksi/2017/752/contents/made

Shakin_Steve

Either way, the bank is going to honour the dd until told otherwise.

Anthorn

Well, if you can get get a refund under the terms of the Direct Debit guarantee you're a better man that I am Gunga Din. It's happened to me several times most recently with American Express, that a company has taken an increased payment without notifying me or an amount which is not due. But the bank refers me to the retailer while the retailer refers me to the paying bank. Probably a need to tighten up the rules on the Direct Debit guarantee but at this time as far as I'm concerned the guarantee is not worth the paper it's printed on.

SnowTiger

blackaqua wrote: »

I had a direct debit taken in error, as the payment had already been made manually.

That doesn't mean the direct debit was taken in error. Sample wording of the guarantee is here. This part is important:

If there are any changes to the amount, date or frequency of your Direct Debit the organisation will notify you (normally 10 working days) in advance of your account being debited or as otherwise agreed. If you request the organisation to collect a payment, confirmation of the amount and date will be given to you at the time of the request

If you were notified by the organisation they would take £x on y date and they did that, they haven't broken the agreement; even if you did made an interim payment.

blackaqua

Thanks for the comments.

Cheers for pointing to that legislation. A bit of googling suggests this is in force from today and includes stuff like the open banking, so wouldn't have applied at the time. Anything relevant preceding this?

I've not detailed the organisation taking the money as this was sided in my favor - at the point of payment it was clearly stated that the direct debit wouldn't be taken. So taking of the payment was in error.

gt94sss2

blackaqua wrote: »

Cheers for pointing to that legislation. A bit of googling suggests this is in force from today and includes stuff like the open banking, so wouldn't have applied at the time. Anything relevant preceding this?

I am afraid you are on a hiding to nothing.

agrinnall posted to the relevant legislation earlier but instead of clause 86 could have pointed to you to clause 80 which legally actually gives financial institutions 10 working days to make a refund if a direct debit is in error.

See https://www.legislation.gov.uk/uksi/2017/752/regulation/80/made

You are correct that this has only just come into force so here is the earlier version from 2009: https://www.legislation.gov.uk/uksi/2009/209/regulation/64/made which is virtually identical to the newer version (referencing aside)

(PS: Clause 86 is Clause 70 in the 2009 version)

agrinnall

gt94sss2 wrote: »

I am afraid you are on a hiding to nothing.

agrinnall posted to the relevant legislation earlier but instead of clause 86 could have pointed to you to clause 80 which legally actually gives financial institutions 10 working days to make a refund if a direct debit is in error.

See https://www.legislation.gov.uk/uksi/2017/752/regulation/80/made

You are correct that this has only just come into force so here is the earlier version from 2009: https://www.legislation.gov.uk/uksi/2009/209/regulation/64/made which is virtually identical to the newer version (referencing aside)

(PS: Clause 86 is Clause 70 in the 2009 version)

I'm a bit puzzled by Clause 80, as point 1 says that the refund must be requested within 8 weeks of the debit being applied, but as far as I'm aware the DD Guarantee is effective for much longer than that (in fact, I wasn't able to find any time limit when I looked previously).

Are these perhaps the minimum requirements, but the DD Guarantee provides additional protection? If so, then unless there is an alternative definition as part of the DD Gaurantee "immediate" should be taken by the consumer to mean what it does in normal usage (but I still think Clause 86 would apply, because immediate would mean the initiatiation of the payment rather than receipt).