Unauthorised direct debit query

elsien

Family member has a credit card. No direct debit set up because it’s 0% and they manually pay the payment each month with the aim of clearing it by the time the bought percent period ends. (Yes, I know)

The bank unilaterally set up a direct debit and took the full amount leaving the current account empty bar £50. Bank has put the money back now but although they apologised and acknowledge that there wasn’t a signed direct debit they said can do that “ in some circumstances.”
Family member did not ask what those circumstances were so I’m curious if anyone knows how the bank can do this?

grumpy_codger

I’m curious if anyone knows how the bank can do this?

If it's the same bank, see MSE: Setting-off rules DON'T bank where you've got debts

However, if it's 0% the bank has absolutely no reason for doing this - and they admitted it was a mistake.

flaneurs_lobster

Reading the rules for DDs on the Pay.uk site, I don't think that the bank has more rights to set up a DD on a person's account than any other body. It certainly has no rights to debit an account using an unauthorised DD.

There's mention of a "signed direct debit" (or rather the lack of), assume that means "authorised". There are mechanisms for setting up/authorising DDs that don't require a physical signature.

A business can make the setting up of a DD mandatory when applying for ongoing services (or repaying loans) but this case is clearly an error. Apart from anything else, why bother? They could have "adjusted" the balance(s) without it.

Section62

https://forums.moneysavingexpert.com/discussion/6661184/unauthorised-direct-debit-query

It sounds a bit like one of those 'responsibile lending' things - if the customer is at risk (or has) incurred fees or interest by missing multiple payments then it wouldn't be wholly unreasonable for a bank providing both credit card and current account to set up a direct debit… but not without there being something in the T&C's to allow that, and not without at least informing the customer in advance of the DD being set up.

Checking the credit card provider's T&C's would be the next step.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6661184/unauthorised-direct-debit-query

So is the credit card with the same bank as their current account where the funds were taken from? Seems everyone is assuming so but you dont actually state one way or the other.

How long has the account been open? Approximately how many manual payments have they made? Presumably they weren't clearing the balance of the statement each month? When were they making the payments relative to the due date?

Have you looked back at the statements and seen what it says regards payments? Both the last one that was collected by DD and the prior ones?

At a guess you didnt read the application screens fully and did actually set up a DD on applying for the card. With some banks if you make any payment before the DD is due to be collected then the DD won't actually collect. Therefore if the prior manual payments were early its been cancelling the DD each time but if the latest one was a few days later then the collection was already in progress and so completed the collection. The statements should say about the DD and if Im right then both the last and older statements will say the same. It would be very odd for a bank to just decide to set up a DD for an existing account without customer instructions.

https://forums.moneysavingexpert.com/discussion/comment/81936349#Comment_81936349

Most T&Cs have a clawback term but when thats triggered they dont set up a DD but instead just move the monies given both accounts are in their control they dont need to use third party mechanisms like DD

friolento

https://forums.moneysavingexpert.com/discussion/6661184/unauthorised-direct-debit-query

have you got a bit more information, e.g.

• Is the credit card provider the same as the current account provider?
• If not, how did the credit card provider know the current account details?
• How many monthly payments had been due, how many had been made in time before the DD was made?
• It would be useful to know the card and the provider name so we can see what the T&Cs say

NB: what do you mean by your comments in brackets?

Woodstok2000

Are you certain the bank set up a direct debit, rather than just taking the balance from the current account?

Section62

https://forums.moneysavingexpert.com/discussion/comment/81936398#Comment_81936398

Most T&Cs have a clawback term but when thats triggered they dont set up a DD but instead just move the monies given both accounts are in their control they dont need to use third party mechanisms like DD

I wasn't referring to 'clawback'. Rather an example situation in which a customer were unnecessarily incurring fees and charges because they were forgetting (or otherwise failing) to meet the minimum payment requirement on time.

elsien

https://forums.moneysavingexpert.com/discussion/comment/81936414#Comment_81936414

That is the information I have been given. That the bank originally said they had done it because of the direct debit, but when the family member asked for that to be checked because they had not signed or otherwise agreed a direct debit, it was confirmed that there was no signature/online agreement.

I have no idea how many payments have already been made, but they have been on time and covering the minimum amount.

It is now sorted, I was just curious in general terms about the circumstances in which banks could just hoik payments out of their own accord where payments have been made in line with the terms and conditions and there is no outstanding debt outside of that.

born_again

there wasn’t a signed direct debit

Can't remember last time I had to sign a DD, as most are online. Which you simply agree too.

molerat

https://forums.moneysavingexpert.com/discussion/comment/81938319#Comment_81938319

Signed would likely also cover digitally signed. I did one on line last night where there were 2 boxes, one pre ticked as signed by the company and one for me to tick and clearly stating as signed by me.