Hi all, wonder if anyone can shed any light on this please. I have a
bank account and a fairly new account with Selftrade, an execution
broker. I signed up online and did not fill in any forms. I had to
verify my bank account to them by post. Shortly after I spotted a
direct debit set up in my bank account for Selftrade.
I called them and asked why. The lady said it was so I could pay into
my account by direct debit. I explained that I would not be doing this,
and would continue using a debit card. She then said that it was needed
under money laundering regulations, to establish an "audit trail" and to
confirm that money was moving to and from this nominated bank account
I said I wanted to cancel the mandate as I did not permit 'stale'
mandates to hang around on accounts, and always clean them up. Since
there is no need for Selftrade to take money out of my bank account,
there is no need for a direct debit instruction to be present on the
account as far as I can see. She replied that if I cancelled the
instruction I would also need to close my Selftrade account. She
referred me to the signup form.
Sure enough the signup for a dealing account states the following:
"You *must* set up a Direct Debit instruction from a UK bank to open a
Selftrade account. Please check that your bank offers a Direct Debit
facility for the account that you wish to nominate. You do *not* have
to fund your account by Direct Debit.
This Direct Debit instruction gives you the flexibility to make payments
any time __to and from__ (my emphasis) your Selftrade account."
I didn't use the form to sign up and was not aware that a Direct Debit
was mandatory, however one has been set up anyway, which is fair enough.
It could be argued that now the account has been opened (the form's
words) it has served its purpose and can be cancelled.
However I fail to see how a DD facilitates payment *to* my bank account,
or how it establishes an audit trail, or what kind of money laundering
could take place or be prevented by it.
I called the bank and they said that they'd "heard of it" before but
"hardly anyone does it like that" these days. They also reassured me
that in the event I dispute any money taken by Selftrade using that DD
instruction, I would be protected under the DD guarantee and have the
money refunded. Selftrade should never take any money in this manner
as I choose not to fund my account in that manner. The lady I
initially spoke with agreed in that case, but still insisted the DD
instruction must stay.
Does anyone here know more about this supposed system for using a DD
instruction when money is being paid into a bank account? Obviously if
there is a purpose served then I will leave it alone, but I've never
heard of such a thing until now.
- posted 11 years ago