Tesco bank failed to take DD; threatening my credit record

jamiewakeham

I have a credit card with Tesco Bank which I stacked up with major purchases on an 18 month 0% deal.  I had a direct debit set up to take the minimum amount every month.  For 16 months this has worked perfectly.  Payments have been taken on the 24th of every month.

Aware that the deal was coming to an end, I modified the DD mandate on 7th March to switch from paying the minimum to clearing the whole balance.  I then forgot all about it.
On the 24th March I received a letter charging me a missed payment fee of £12, apparently incurred on the 22nd.  Checking the app I could see that no DD had been taken at all.

I immediately contacted their complaints line, saying that I was not happy to have been charged for their mistake!  I asked that the fee be immediately refunded, and for an explanation.

Their response: "You contacted us to let us know that you are unhappy we have charged you a late payment fee when you have a Direct Debit in place.  I understand from reviewing your account that you amended the Direct Debit on the 7 March from a minimum payment to a previous balance payment.  When a Direct Debit is amended online it is confirmed that this would not be updated until after your next statement was produced and that a manual payment would be required.  I'm sorry if this was not clear to you.

Based on this I won't be upholding your complaint. However, as a gesture of goodwill I've arranged for the late payment fee to be refunded and this will show on your next statement.  Moving forward if any further fees or charges are applied to the account we would not look to refund these under this principle unless it was a Tesco Bank error."

This mystified me.  I am not the sort of person who would read a drop down telling me that a manual payment was required and just OK it away.  So I modified my DD again.  The actual message it displays is If your payment is due in the next seven days your previous direct debit instruction may proceed as shown in your current statement.

So, I contacted them again to point out that the message doesn't actually tell you to make a manual payment at all.  I also, now worried, asked if they had made any report to a credit agency.  Their response: "Thank you for getting in touch to let me know about your further concerns relating to the information contained online, when you amend your Direct Debit (DD).  After looking at the further information you provided, my decision remains unchanged. When an amendment is made to a DD online, we ask you to check what you have told us. On this page there is a heading "What you should know " it confirms "changing your DD now could result in no payment being made this month".  You would have confirmed this by ticking the box to proceed. I appreciate you have now double checked this, however at different stages throughout the billing cycle the information varies relating to when the DD would be in place. With regards to information that we report to the Credit Reference Agencies (CRA), we would be reporting a missed payment as this is a true reflection of how your account was managed in the last month. As a responsible lender, we're required to provide true and accurate information to the CRA's regarding our customer's payment history." 

 So.  They are claiming that 1) changing a direct debit a full 17 days in advance means that it won't be collected that month, and 2) I was told this and decided to ignore it.  I'm finding both of these pretty hard to believe.  And as a result, they're going to damage my credit rating.  Not that I have any major credit applications coming up - I've a ten year mortgage fix and no need for new credit - but the principle of this is making my blood boil.

Apparently my only option now is to take this to the ombudsman.  This seems ridiculous, but is this the only way to stop them putting a black mark onto my credit record?
I was going to pay the whole lot off manually and close the account, but now I think I might leave a small balance there and check on the 7th of next month what message they give if I alter the DD mandate again.

Puddles83

I don’t think you have much of a case.
It’s your mistake. Suck up the missed payment marker and move on - in the grand scheme of things one missed payment marker is going to have little impact on your credit history if otherwise well managed.

born_again

TBH. Usual policy if you have never missed a payment is to simply refund the fee and that is the end of the matter. Due to errors (read my fault) I've done a couple of times with different co's and had no issues. Then again I did not raise a complaint. Simply spoke to the operator, saying my fault can they do anything.

In effect they are only reporting a fact. So given the proof from their site, the ombudsman may back them up. But nothing ventured nothing gained. 

cannugec5

I recently set up  a DD to pay the entire Tesco CC balance each month. I believed I was well in time for the next due payment. I checked on the day I believed payment was due and found nothing had been paid. I waited 24hours and then phoned them. A very nice man explained that direct debits are ‘called’ a number of days ahead of payment date, and indeed I had missed the deadline for that particular month when I set up the DD. So I made a manual payment, to ensure no late fees. The following month I again checked on the due date, and it all went through fine. 

I have always been in the habit of keeping a close eye on newly arranged or changed regular payments. 

A_Lert

Thanks for the warning to not get a Tesco credit card!

Legally they might get away with it, but it's deeply anti-customer on their part and basically incompetence. There's no good reason for amending a direct debit to result in the card provider not taking payment at all then blaming the customer for it. I have had no such issue on my Halifax or Virgin cards.

Batesy1976

A_Lert said:

Thanks for the warning to not get a Tesco credit card!

Legally they might get away with it, but it's deeply anti-customer on their part and basically incompetence. There's no good reason for amending a direct debit to result in the card provider not taking payment at all then blaming the customer for it. I have had no such issue on my Halifax or Virgin cards.

I agree.

I can understand them requiring a certain amount of time to change the instruction (DD requirements for notices over changes etc) but the original instruction should have remained in place.

Might actually be worth a complaint to the FOS (and I don't often say that.)

jamiewakeham

I mean, if the warning that the entire instruction might fail was really there then I would take the blame - but I have no recollection of it at all.  And seventeen days not being long enough to modify the instruction seems ridiculous.

Going to the FOS seems to be my only remaining avenue -it's that or just take the black mark on my credit record.

Just to make me feel better, it seems that they have now blocked my app from allowing me to make a manual payment!  I've just tried to make a payment to cover the missed one, and all methods fail.  They've been ringing me four times a day (interrupting my teaching) so it looks like I'm going to have to speak to them on the phone just to make a payment.  Not happy.

Thrugelmir

Direct debits have to be set-up a minimum of 10 days before the collection date. As direct debit runs are a batch process.  Company's will be creating these batches well in advance. While it's possible to delete an individual collection prior to the run date. It's not possible to add. 

Chalk it up to experience. 

jimjames

Thrugelmir said:

Direct debits have to be set-up a minimum of 10 days before the collection date. As direct debit runs are a batch process.  Company's will be creating these batches well in advance. While it's possible to delete an individual collection prior to the run date. It's not possible to add. 

Chalk it up to experience. 

I can understand that for a new DD but an existing DD where the only change is the payment amount seems a little OTT

Batesy1976

Thrugelmir said:

Direct debits have to be set-up a minimum of 10 days before the collection date. As direct debit runs are a batch process.  Company's will be creating these batches well in advance. While it's possible to delete an individual collection prior to the run date. It's not possible to add. 

Chalk it up to experience. 

They're not setting up a DD though, there was already one in place.

They could very easily have left the existing instruction in place. In fact, every company I've ever changed a DD on has made me aware the existing DD would be taken if there wasn't time, and in cases where there wasn't, that's exactly what has happened.

phillw

cannugec5 said:
A very nice man explained that direct debits are ‘called’ a number of days ahead of payment date, and indeed I had missed the deadline for that particular month when I set up the DD. 

Some credit cards require the DD to be in place before the statement was created, so about a month ahead.
Skipping a DD when you change from minimum to full payment is sharp practice, but 0% cards seem to exist to catch people out.