Service charge - "admin" fee for Direct Debit

mschris

Hi,

I hope this is the right board, I'm being charged £25 to setup a monthly Direct Debit (instead of yearly) to cover "admin" fees for my service charge - is this legal?

Can i be charged £25 to setup for a monthly DD?

G_M

I suspect the answer depends on your lease.

What does your lease say about admin charges?

And how often does your lease say your service charge is payable? if it is not monthly, then you've requested a payment term other than as specified in your lease so can be charge for setting up this non-standard frequency.

davidmcn

Unless your lease says something to the contrary I don't see why they can't charge it. Presumably from what you're saying you can avoid it by paying annually?

eddddy

I guess you you mean that you are a leaseholder, and this admin fee is being charged by your freeholder or their managing agent.

If so, the law says that any admin fee not stated in the lease must be 'reasonable' - so it must reflect the effort involved and/or the costs incurred.

If the freeholder/managing agent insists on charging the £25, and you want to challenge it, you'd have to go to the tribunal. It's probably not worth the hassle.

And TBH, I think the tribunal might say that £25 is a reasonable fee.

mschris

I guess you you mean that you are a leaseholder, and this admin fee is being charged by your freeholder or their managing agent.

Yes

And TBH, I think the tribunal might say that £25 is a reasonable fee.

Really? £25 to setup a DD monthly instead of annually? Surely it's the same process, instead of setting a DD to 1 payment once a year it's set to monthly and the figure divided by 12. Surely that can't be more work to the value of £25?

What is the work someone is doing?

Can you not just set up a standing order instead?

I don't think so, they would need to agree or something to a SO. Also, I can do an SO or a bank transfer, but that doesn't result in any protection. If I want to challenge it in some way a DD provides a tiny layer to helps should something go wrong.

davidmcn

But just to clarify, we are talking about an optional facility to pay monthly by DD and they still offer an alternative fee-free method of payment instead? And there's nothing relevant in your lease about it?

bap98189

mschris wrote: »

Really? £25 to setup a DD monthly instead of annually? Surely it's the same process, instead of setting a DD to 1 payment once a year it's set to monthly and the figure divided by 12. Surely that can't be more work to the value of £25?

What is the work someone is doing?

Somebody at the company end now has to check 12 times that a payment has been received and allocated correctly to the OP's account.

They also now have 12 bank transaction charges to pay instead of 1 (business banking isn't free).

It wouldn't be hard to justify costs for that of £25 per year.

Nobbie1967

Are the service charges paid in advance? If normal practise is to pay whole amount in Jan, but you're proposing to pay over the year, they are extending credit to you, so the £25 charge sounds reasonable, much like you get with car insurance.

eddddy

bap98189 wrote: »

Somebody at the company end now has to check 12 times that a payment has been received and allocated correctly to the OP's account.

They also now have 12 bank transaction charges to pay instead of 1 (business banking isn't free).

It wouldn't be hard to justify costs for that of £25 per year.

In the past, I believe that the tribunal has accepted that £50 per hour is a reasonable admin charge rate.

So that represents half an hour's work over the space of a year (ignoring bank charges) - I think the managing agent could probably justify that.

G_M

I notice you are responding, but have not answered any questions raised here.

What does your lease say?

mschris

But just to clarify, we are talking about an optional facility to pay monthly by DD and they still offer an alternative fee-free method of payment instead? And there's nothing relevant in your lease about it?

Yes, that's what we're talking about.

Somebody at the company end now has to check 12 times that a payment has been received and allocated correctly to the OP's account.

They also now have 12 bank transaction charges to pay instead of 1 (business banking isn't free).

It wouldn't be hard to justify costs for that of £25 per year.

Why is this a manual process? No mobile phone company is checking 1000s of DD manually. This is all automated, hell, I'm sure I could find software online to do this at £25 per year for 1000s of users.

Are the service charges paid in advance?

Yes.

If normal practise is to pay whole amount in Jan, but you're proposing to pay over the year, they are extending credit to you, so the £25 charge sounds reasonable, much like you get with car insurance.

Kinda - car insurance you're paying for a finance deal. This isn't that. I'm just paying over 12 months.

I just feel like this impacts people like me, people that can't afford to pay all of it in one-go. I can't pay by credit card either.