Service charge - "admin" fee for Direct Debit

eddddy

mschris wrote: »

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

Because mobile phone companies have many thousands of customers who pay monthly by DD - they will have invested hundreds of thousands of pounds in technology to automate billing and payments.

For a freeholder who has maybe 20 or 30 leaseholders who pay by monthly DD, I suspect that...

- an accounts clerk logs into their online banking in one window on their pc
- then logs into their leaseholder accounts application in another window
... and manually copies and pastes the numbers across

mschris wrote: »

I'm sure I could find software online to do this at £25 per year for 1000s of users.

So maybe you should get out there and sell the software your services to managing agents all over the country.

G_M

mschris wrote: »

Yes, that's what we're talking about.
I repeat - what does your lease say?
When/how are you obligated to pay?
Is this an alternative facility they are offering voluntarily to extend to you, which they don't have to agree to? In which case they can impose whatever terms they wish, and you can either agree, or pay as required by the lease.

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.
Phone comanies have complex IT systems linking call records to billing to bill payment.

Yes.
Then you are asking to stop ayng in advance but to pay monthlyy instead.

Kinda - car insurance you're paying for a finance deal. This isn't that. I'm just paying over 12 months.
You are asking for a finance deal! Instead of paying eg £1,200 on Jan 1st, you are asking to pay £100 on 1st of each month. Your final December payment will be 11 months late. That's like a finance deal.

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.

Yes. Pele n low incomes and/or with limited savings are impacted more than others.

mschris

I repeat - what does your lease say?
When/how are you obligated to pay?
Is this an alternative facility they are offering voluntarily to extend to you, which they don't have to agree to? In which case they can impose whatever terms they wish, and you can either agree, or pay as required by the lease.

I need to dig out the actual wording. My question was around the cost of setting up a monthly DD i didn't think it was really relevant as this would apply any monthly DD.

Phone comanies have complex IT systems linking call records to billing to bill payment.

I don't think that they're "complex," councils have them, independent gyms have them. I'm pretty sure if did some reason I would be able to find a simple service to do this, especially in 2018. It's essentially some pretty simple software.

You are asking for a finance deal! Instead of paying eg £1,200 on Jan 1st, you are asking to pay £100 on 1st of each month. Your final December payment will be 11 months late. That's like a finance deal.

I don't think I am. 1) this a is a pre-emptive cost. I am paying upfront for services yet to be delivered. With a car I would already be in possession of this.

In fact, technically speaking they would have £100,000+ sitting in an account gaining a significant amount of interest for a prolonged period.

I think you're going off the main point - do you think it's fair to charge £30 to setup a monthly DD rather than paying yearly?

Focus on the principle, surely this feels like a dated, illogical charge that penalises anyone that can't afford big upfront costs like this.

davidmcn

mschris wrote: »

I don't think I am. 1) this a is a pre-emptive cost. I am paying upfront for services yet to be delivered. With a car I would already be in possession of this.

No, you wouldn't already be in possession of a year's insurance, you'd merely have paid upfront for it (e.g. you could cancel it during the year and get a pro rata refund).

I'm with G_M on this - if they're entitled to the annual lump sum up front, but you opt to pay it off over the year (a facility which they're not obliged to offer at any price), then what they are mainly doing is charging you for credit, not the admin of processing your direct debits (though that may also be a factor). How much would it cost you to borrow the money from elsewhere?

saajan_12

Paying over 12 months should be more expensive than paying upfront for many reasons
a) admin of processing 11 extra payments, allocating them to your account
b) credit risk of you not paying due to changed circumstances in several months time
c) lost interest on part of amount

All in I'd charge more than £25 for the installments. OP, pay the fee or borrow the money to pay the service charge upfront.

gingercordial

mschris wrote: »

I think you're going off the main point - do you think it's fair to charge £30 to setup a monthly DD rather than paying yearly?

Yes actually, I do. It really isn't comparable to a huge company like the mobile phone giants.

Are you saying if you paid annually it would be by direct debit?

If so, I grant you there shouldn't be much difference in terms of setting up an annual one versus one that takes payment monthly. However it will still require somebody to keep on top of who has paid monthly. Even if they do have software that can cross-check DDs received with leaseholder payments due (and that doesn't come cheap!) there is still somebody who needs to receive and investigate an exceptions report each month, chase those who have cancelled their DDs/had them bounce for lack of funds/things gone wrong with current account switches etc (there will always be some of these). They don't know you're one of the people who is always going to pay yours on time. Even if your DDs always go through perfectly, unfortunately you are paying for this monitoring service and to an extent subsidising your fellow leaseholders who may have had DDs bounce in the past making cross-checking necessary.

If your annual payment option is not by DD, and paying monthly means they have to set one up when they wouldn't have had to at all, I don't think you have a leg to stand on.

On top of this is the fact that they are effectively extending you credit terms, as others have said.

So no, I don't think £25 is unreasonable for that. Though I agree it does penalise those on lower incomes who can't pay upfront in exactly the same way that insurance companies and the DVLA do.

mschris

Are you saying if you paid annually it would be by direct debit?

Yes

chase those who have cancelled their DDs/had them bounce for lack of funds/things gone wrong with current account switches etc

Yes but those are charged. Like £20 per bounce for that money has been allocated to chase these people.

I don't think you have a leg to stand on.

Ok

So no, I don't think £25 is unreasonable for that. Though I agree it does penalise those on lower incomes who can't pay upfront in exactly the same way that insurance companies and the DVLA do.

Urggh it's just the way isn't it. I hate it, I can't even put this on an interest free credit card.

Ok thanks for your replies. I feel like in principle this shouldn't exist but I think I will just have to swallow it.