Direct debit guarantee - is this the way it's supposed to work?

[Dahu371]

One of our customers has been paying a subscription by direct debit each month for 2 years.

He contacted his bank and said this was a mistake (I'm not entirely sure what he told them, the bank wouldn't tell me).

His bank refunded him every payment he'd made for the last two years.

His bank came to me and said under the direct debit scheme I was required to reimburse them immediately, and if I didn't think this was correct I would have to take it up with the customer.

It isn't right. There was nothing wrong with the way the dd was set up, the customer just forgot to cancel it (maybe) and is trying it on.

So now if I want to get this money back I have to go down the legal route! Is this the way the dd scheme is supposed to work? Seems crazy to me.

 

[elaine@cheapaccounting]

have a read of this ...

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/27/27-directdebit-guarantee.htm

then make a complaint to your bank if you feel that they acted incorrectly

 

[Dahu371]

Thanks for the reply. There's some interesting stuff on that website, but I can't find anything that directly relates to my situation. I did find a bit more detail, the bank said the reason was "no advance notice received by payer" but I have plenty of backup to prove this was nonsense.

I've had a good google but I'm still uncertain as to whether the bank has acted incorrectly or not. It just seems plain wrong to me that someone can cite this reason and the bank immediately refunds him/her straight away for payments going back years.

 

[safesys]

The bank will only do this if your customer asked them to - and they usually make it very clear to the customer that once the indemnity claim is raised, if the supplier objects with a valid reason, the bank will reclaim the money from the customer again.

So if you tell them your side of the story and cooperate by showing them the info you've sent your customer, you should be alright. What bank is it?

 

[Merchant UK]

wow, i wonder what bank he was with???

I cancelled my Direct Debits with both the originator and the bank and although the bank have now no authority to remove funds from my bank they told me if the company tried to take the debit after i've cancelled it they would still charge me £35. If that don't break the DD regs what does??

The bank in this case was santander

Every penny refunded for 2 years???, Thats a pretty good fraud if he got away with that

 

[Dahu371]

The bank was RBS.

This was actually a few months ago now. I spoke to them at length and came away very much under the impression that there was nothing further that they could or would do to help me. We did contact the customer and started going down the legal route and he eventually did pay us a settlement of something like 60%. Looks like if this ever happens again we should be a bit firmer with the bank.