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 only.
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."
(from http://www.selftrade.co.uk/forms/pdf/F22.pdf )
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.