Surely Not - Direct Debit Loophole??

moneymare

Had a meeting today with a chap with 17 years experience in d/d and he told our staff that regardless of circumstance, under the d/d guarantee, the bank have to refund monies claimed under the d/d if you claim that they have been taken incorrectly....i.e. amount, date paid etc etc.

Now, hypothetically speaking, he said that you could go to the bank and say that you want an immediate refund of the last 8 (for example) years direct debit payments against a mortgage, because they were incorrect. According to him, the bank HAVE to comply, and you do not need to provide any proof.

The bank then take the matter up with the originator who then has to go back to the client.

Surely this cannot be correct? The chap explained that because nobody really understands this, it isn't often abused.

Any comments from experienced banking-types??

stebiz

moneymare wrote: »

Had a meeting today with a chap with 17 years experience in d/d and he told our staff that regardless of circumstance, under the d/d guarantee, the bank have to refund monies claimed under the d/d if you claim that they have been taken incorrectly....i.e. amount, date paid etc etc.

Now, hypothetically speaking, he said that you could go to the bank and say that you want an immediate refund of the last 8 (for example) years direct debit payments against a mortgage, because they were incorrect. According to him, the bank HAVE to comply, and you do not need to provide any proof.

The bank then take the matter up with the originator who then has to go back to the client.

Surely this cannot be correct? The chap explained that because nobody really understands this, it isn't often abused.

Any comments from experienced banking-types??

But what part of the guarantee would you claim under. I think the guy may be a bit confused. You authorised the Direct Debit afterall.

http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=828&a=10383

But keep looking I'm sure there are more loopholes out there.

Stebiz

moneymare

He referred to this part of the guarantee - "If an error is made by Joe Bloggs Mortgage Co, you are guaranteed a full and immediate refund from your branchof the amount paid".

So, he claimed, you could technically walk into your branch, explain that the amounts on the direct debit are all incorrect and demand a full refund. No proof required. The Dierct Debit guarantee allows the bank to reclaim the money from the originator, ie Joe Bloggs Mortgage Co

CLAPTON

and presumably the mortgage company would then repossess the property

Badger_Lady

They certainly wouldn't be happy about it.

OliveOyl_2

But if you owed the money, you would still owe it.

AFAIK DD's can be reversed under their guarantee if the amounts or frequency etc are incorrect. What happens then is that the company to whom you owe the money comes after you for what you owe.
I didn't think of it as a "loophole" more a guarantee of security; so that if the banks allow another company to help themselves to your money you are secure and protected from their incompetancy or dishonesty.

moneymare

Yes, His point was that if, for example, you had taken out a 100% mortgage and did this after 5 or 6 years, you could claim back x-amount of thousand pounds and do a flit, leaving the house for the mortgage company to do with as they see fit.

Not something I would EVER consider doing, but I'm sure there are some unscrupulous types out there who would give it a go

stebiz

OliveOyl wrote: »

But if you owed the money, you would still owe it.

AFAIK DD's can be reversed under their guarantee if the amounts or frequency etc are incorrect. What happens then is that the company to whom you owe the money comes after you for what you owe.
I didn't think of it as a "loophole" more a guarantee of security; so that if the banks allow another company to help themselves to your money you are secure and protected from their incompetancy or dishonesty.

I understand your point but I think OP was originally referring to credit card payments. Then you could take your charges and refund the rest. I'd love to see somebody try it:D

Stebiz

OliveOyl_2

oh b*gger, I have never paid my cc by DD.......

tyllwyd

It doesn't sound like a loophole to me, more like fraud.

stebiz

tyllwyd wrote: »

It doesn't sound like a loophole to me, more like fraud.

I agree. If you took all your money back and ran off into the sunset. However would you think it fraud if you received all your credit card money back -took out your charges - and gave the rest back?? Just another way of looking at it. Not saying I agree but I can see the value in the original post.

Stebiz