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  • FIRST POST
    • blackaqua
    • By blackaqua 9th Jan 18, 9:24 PM
    • 175Posts
    • 528Thanks
    blackaqua
    Direct Debit Guarantee Refund
    • #1
    • 9th Jan 18, 9:24 PM
    Direct Debit Guarantee Refund 9th Jan 18 at 9:24 PM
    Just looking for some opinions, as I can't see anything in the past 5 years on a search.

    I had a direct debit taken in error, as the payment had already been made manually. This put me from credit into an unarranged overdraft smack bang in the middle of a mortgage application. The company acknowledged this and suggested the DD guarantee route, which would be quicker than their refund.

    The guarantee is pretty clear that:
    If an error is made in the payment of your Direct Debit, by the organisation or your bank or building society, you are entitled to a full and immediate refund of the amount paid from your bank or building society
    The bank (HSBC) refunded money the next working day (saying it would take 1-5 days to do so). Anyhow, bank refused that this should be immediate. Submitted complaint to financial ombudsman who have sided with the bank, concluding that they followed their internal processes correctly.

    My interpretation of the DD guarantee is immediate would be on the phone or within the 2 hours faster payment, then the bank would follow up and investigate to check it was legit.

    I had thought the ombudsman would be a bit more transparent and reference the DD scheme rather than state the bank followed their process?
Page 1
    • Flobberchops
    • By Flobberchops 11th Jan 18, 10:16 PM
    • 744 Posts
    • 530 Thanks
    Flobberchops
    • #2
    • 11th Jan 18, 10:16 PM
    • #2
    • 11th Jan 18, 10:16 PM
    It's possibly a bit ambiguous but in this context the word "immediate" means "without delay/as fast as possible" rather than "instantaneous". Moving money between internal and customer accounts sometimes has a processing time, or a daily cut-off. I'm not sure why, that's a technical issue few will be able to answer (probably to do with manual checks and authorisations), but that honestly is just the way things work.

    Either way, you are in effect getting the money refunded up-front, before the bank contacts the DD originator and comes to a verdict about the validity of your claim, so even after the bank's initial timescale to refund you could potentially still have the refund taken from you (for example if the company disputes it). If receiving the disputed money *immediately* was of paramount importance to you, like if it was the difference between your children going hungry that night or being able to buy food, at the bank's discretion they may have been able to give you an on-the-spot credit from a sundry account. By all accounts though, the bank took your claim seriously and actioned it straight away, so I'm not surprised the FoS sided with them.
    I work for a UK bank, but any comments made on this forum are solely my personal opinion. Caveat Emptor!
    • Shakin Steve
    • By Shakin Steve 12th Jan 18, 6:46 AM
    • 1,455 Posts
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    Shakin Steve
    • #3
    • 12th Jan 18, 6:46 AM
    • #3
    • 12th Jan 18, 6:46 AM
    Have I got this right? You paid a company yourself before the direct debit was due, but that company still requested the money from your bank? If this is the case, then it!!!8217;s the company that!!!8217;s at fault, not the bank. Either you or they should have cancelled the dd.
    I came into this world with nothing and I've got most of it left.
    • PeacefulWaters
    • By PeacefulWaters 12th Jan 18, 6:59 AM
    • 8,318 Posts
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    PeacefulWaters
    • #4
    • 12th Jan 18, 6:59 AM
    • #4
    • 12th Jan 18, 6:59 AM
    Have I got this right? You paid a company yourself before the direct debit was due, but that company still requested the money from your bank? If this is the case, then it’s the company that’s at fault, not the bank. Either you or they should have cancelled the dd.
    Originally posted by Shakin Steve
    The company isn't necessarily at fault. Especially if the lead in time for requesting the DD is already under way.
    • agrinnall
    • By agrinnall 12th Jan 18, 9:46 AM
    • 20,321 Posts
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    agrinnall
    • #5
    • 12th Jan 18, 9:46 AM
    • #5
    • 12th Jan 18, 9:46 AM
    Next working day is in line with the Payment Services Regulations 2017. See clause 86.

    https://www.legislation.gov.uk/uksi/2017/752/contents/made
    • Shakin Steve
    • By Shakin Steve 12th Jan 18, 12:48 PM
    • 1,455 Posts
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    Shakin Steve
    • #6
    • 12th Jan 18, 12:48 PM
    • #6
    • 12th Jan 18, 12:48 PM
    Either way, the bank is going to honour the dd until told otherwise.
    I came into this world with nothing and I've got most of it left.
    • Anthorn
    • By Anthorn 12th Jan 18, 1:48 PM
    • 3,670 Posts
    • 946 Thanks
    Anthorn
    • #7
    • 12th Jan 18, 1:48 PM
    • #7
    • 12th Jan 18, 1:48 PM
    Well, if you can get get a refund under the terms of the Direct Debit guarantee you're a better man that I am Gunga Din. It's happened to me several times most recently with American Express, that a company has taken an increased payment without notifying me or an amount which is not due. But the bank refers me to the retailer while the retailer refers me to the paying bank. Probably a need to tighten up the rules on the Direct Debit guarantee but at this time as far as I'm concerned the guarantee is not worth the paper it's printed on.
    • SnowTiger
    • By SnowTiger 12th Jan 18, 2:01 PM
    • 3,301 Posts
    • 2,273 Thanks
    SnowTiger
    • #8
    • 12th Jan 18, 2:01 PM
    • #8
    • 12th Jan 18, 2:01 PM
    I had a direct debit taken in error, as the payment had already been made manually.
    Originally posted by blackaqua
    That doesn't mean the direct debit was taken in error. Sample wording of the guarantee is here. This part is important:

    If there are any changes to the amount, date or frequency of your Direct Debit the organisation will notify you (normally 10 working days) in advance of your account being debited or as otherwise agreed. If you request the organisation to collect a payment, confirmation of the amount and date will be given to you at the time of the request
    If you were notified by the organisation they would take £x on y date and they did that, they haven't broken the agreement; even if you did made an interim payment.
    • blackaqua
    • By blackaqua 13th Jan 18, 10:10 PM
    • 175 Posts
    • 528 Thanks
    blackaqua
    • #9
    • 13th Jan 18, 10:10 PM
    • #9
    • 13th Jan 18, 10:10 PM
    Thanks for the comments.

    Cheers for pointing to that legislation. A bit of googling suggests this is in force from today and includes stuff like the open banking, so wouldn't have applied at the time. Anything relevant preceding this?

    I've not detailed the organisation taking the money as this was sided in my favor - at the point of payment it was clearly stated that the direct debit wouldn't be taken. So taking of the payment was in error.
    • gt94sss2
    • By gt94sss2 14th Jan 18, 12:57 AM
    • 4,045 Posts
    • 1,875 Thanks
    gt94sss2
    Cheers for pointing to that legislation. A bit of googling suggests this is in force from today and includes stuff like the open banking, so wouldn't have applied at the time. Anything relevant preceding this?
    Originally posted by blackaqua
    I am afraid you are on a hiding to nothing.

    agrinnall posted to the relevant legislation earlier but instead of clause 86 could have pointed to you to clause 80 which legally actually gives financial institutions 10 working days to make a refund if a direct debit is in error.

    See https://www.legislation.gov.uk/uksi/2017/752/regulation/80/made

    You are correct that this has only just come into force so here is the earlier version from 2009: https://www.legislation.gov.uk/uksi/2009/209/regulation/64/made which is virtually identical to the newer version (referencing aside)

    (PS: Clause 86 is Clause 70 in the 2009 version)
    Last edited by gt94sss2; 14-01-2018 at 1:07 AM.
    • agrinnall
    • By agrinnall 14th Jan 18, 9:03 AM
    • 20,321 Posts
    • 16,080 Thanks
    agrinnall
    I am afraid you are on a hiding to nothing.

    agrinnall posted to the relevant legislation earlier but instead of clause 86 could have pointed to you to clause 80 which legally actually gives financial institutions 10 working days to make a refund if a direct debit is in error.

    See https://www.legislation.gov.uk/uksi/2017/752/regulation/80/made

    You are correct that this has only just come into force so here is the earlier version from 2009: https://www.legislation.gov.uk/uksi/2009/209/regulation/64/made which is virtually identical to the newer version (referencing aside)

    (PS: Clause 86 is Clause 70 in the 2009 version)
    Originally posted by gt94sss2
    I'm a bit puzzled by Clause 80, as point 1 says that the refund must be requested within 8 weeks of the debit being applied, but as far as I'm aware the DD Guarantee is effective for much longer than that (in fact, I wasn't able to find any time limit when I looked previously).

    Are these perhaps the minimum requirements, but the DD Guarantee provides additional protection? If so, then unless there is an alternative definition as part of the DD Gaurantee "immediate" should be taken by the consumer to mean what it does in normal usage (but I still think Clause 86 would apply, because immediate would mean the initiatiation of the payment rather than receipt).
    • chattychappy
    • By chattychappy 15th Jan 18, 1:58 AM
    • 6,804 Posts
    • 3,697 Thanks
    chattychappy
    It looks like reg 80 rather than 86 to me, but I agree with agrinnall, these are really minimum service standards. The regs are written in terms of "within" or "by", so there is nothing unlawful in faster processing times.

    The DD guarantee says "immediate" which to me is not compatible with saying it would be refunded "the next day". We are used to making a faster payment and it appearing seconds later with another bank, we are used to paying in cash and its showing within seconds on our account, we are used to ATM transactions showing up immediately (or at least shown as pending within minutes) so no reason why a DD refund can't be processed just as quickly when it is a case of a bank refunding its own customer.

    Of course if the banks want the DD guarantee to be "by the next working day", then they are free to change the wording.
    • Westie983
    • By Westie983 15th Jan 18, 2:04 AM
    • 4,354 Posts
    • 14,910 Thanks
    Westie983
    This could happen if you paid within three to four days of the DD date.
    If this is the case then the DD will still be taken as its already been applied for and on route.

    When you look at many credit card statements, its saying payment by DD, manual payments paid within three working days DD will not apply.
    (something similar to this wording)

    You should be able to get the credit card to refund the duplicate payment, its not a Direct Debit Indemnity though as the DD was already on its way to be paid if you made the payment close to the DD date.

    Good luck with whatever route you take.

    Westie983
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    • Armorica
    • By Armorica 17th Jan 18, 3:30 AM
    • 687 Posts
    • 505 Thanks
    Armorica
    Next working day is in line with the Payment Services Regulations 2017. See clause 86.

    https://www.legislation.gov.uk/uksi/2017/752/contents/made
    Originally posted by agrinnall
    That clause isn't really relevant. It's about the processing of payments. Other clauses touch on refunds specifically.

    If there had been an error, this would be an quicker refund case not an up to ten day refund as suggested elsewhere on the threat. [Reg 74 in new version]

    The regulatory narrative states: A refund must be provided to the customer as soon as practicable and in any event by the end of the business day following the day on which the PSP becomes aware of the unauthorised transaction. [I think this used to say immediate. In any case the DD Guarantee says immediate, but end of the next day is when it would become a regulatory breach]

    Before 13/1/18, see 8.106 to 8.113 of https://www.fca.org.uk/publication/archive/payment-services-approach.pdf

    (This is all debatable in the OP's case because of the manual payment if made when the DD was already being processed)

    (2009 clause numbers) Clause 64 refers back to clause 63. That covers a) if amount not notified; b) if amount unreasonably expected. (So essentially variable and non-erroneous DD, not a DD taken in error) [Reg 80 in new version]

    The OP's case is further potentially complicated because it took the account into overdraft which can bring in other legislation (particularly the CCA).

    Anthorn - your claim sounds valid - keep trying it. (Unless you've contractually waived wanting to know...) The amount must be notified in advance. If not, the up to ten day refund kicks in.

    Westie - credit cards aren't relevant for DD transactions...
    Last edited by Armorica; 17-01-2018 at 3:33 AM.
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