Direct Debits - To set up, all you need is the sort code and account number?

I can recall an occurence when my bank refused to reverse a DD completely. There were no "other factors", the money was taken in error to pay a bill I had already paid. I had to wait for the recipient to refund the money, which took about a month.

I raised a formal complaint with the bank and the continued to defend their decision. Their defense was that they needed a valid reason for reversing the DD and not owing the money wasn't on the list! It probably won't surprise you that I no longer bank with this organisation.

My current bank also seems to misunderstand the DD guarantee. The last DD I asked them to reverse, they did but told me that if the other party complained they would "have" to pay them again.

It all serves to illustrate how assurances ("You remain in complete control...") can be chipped away at over time.

Part of the problem is that the DD Guarantee is (IIRC) predicated on the payee "taking money in error". The account holder ought to have an absolute right of reversal, with the matter subsequently left to the transacting parties to sort out. The question of whether the customer has a debt to settle is a completely separate matter and should be of no concern of the bank unless a higher authority compels them otherwise.

At the very worst the refund test should be along the lines of:

"Would the account holder have taken action to make the payment, by cheque, BACS or some other 'push' mechanism, in the absence of the DD mandate being in place?",

with the onus being on the Bank to prove that the account holder would have done so.

Really, the bank will refund the money merely on the account holder's assertion that the payment was fraudulent?

Robert

Absolutely, yes, if it was made by DD. That's part of the DD guarantee.

Mark

istr that was the only way to convince customers to allow other people to take money from their accounts at will.

Yes, and it worked very well. In fact, it probably worked a bit too well, because it got people used to the idea of allowing organisations the ability to dip into their account at will. Which meant that when credit and debit card operators later came up with the idea of the Continuous Charge Authority, people were happy to sign up to it despite the fact that it has virtually none of the protections afforded by a direct debit.

Mark

no I think it worked exactly as intended :-)

tim

On the contrary, the Guarantee promises a refund if an error is made in the payment of a Direct Debit. When an account holder alleges fraud then he is claiming that an improper payment was not in error but was deliberate. Although a bank or building society may have duties towards the account holder in the event of fraud those do not come under the terms of the Direct Debit Guarantee.