Direct Debit Guarantee Scheme(grey area I think)

[yourbank]

I have thought about this quite a bit and I guess I have got this here because I don't see the clear area.
Under the direct debit Guarantee Scheme the rules are as follows:
"The direct debit guarantee applies to all banks and building societies taking part in the direct debit scheme. It says that:

If there is a change in the amount to be paid or the payment date, the person receiving the payment (the originator) must notify the customer in advance.

If the originator or the bank/building society makes an error, the customer is guaranteed a full and immediate refund of the amount paid.

Customers can cancel a direct debit at any time by writing to their bank or building society. "
(from the fos website)

HOWEVER, the issue is where the circumstances are that either the bank returns the DD unpaid.
Advice would be claim the charges from the company yet had it been paid there would have been an immediate refund.
Or another post this evening is that the DD was late and incurred the charge so the bank advised that the company have to refund the charge. Had there not been a charge the OP could have asked for the DD to be refunded as it was an error under the DD guarantee scheme.

Is this grey area not a grey area and have site team/any forum user asked the fos/consumer direct/TS or other body what they would advise consumers. Normally I would have done this already, but it is increasingly not clear.

issue 27 - banking - direct debit guarantee

This is the link to the FOS.

[indebtstudent]

The direct debit gurantee, in my experience does very little to help consumers. This is partly due to lack of understanding on the part of banks & buidling societes.

However I can recall hearing things like if the Dd is returned unpaid then the DD guarantee doesn't apply. But surely if the DD wasn't authorized the bank shouldn't charge the customer?

In any case the DD guarantee is full of holes, you CANNOt cancel you direct debit at any time, you MUSt cancel it the day before the DD is due.

In addition many companies take DD's early, or don't give proper (or indeed any) notice of the amounts to be taken.

[yourbank]

[quote=indebtstudent;16650 26]The direct debit gurantee, in my experience does very little to help consumers. This is partly due to lack of understanding on the part of banks & buidling societes. Totally agree with you

However I can recall hearing things like if the Dd is returned unpaid then the DD guarantee doesn't apply. But surely if the DD wasn't authorized the bank shouldn't charge the customer? Grey area there

In any case the DD guarantee is full of holes, you CANNOt cancel you direct debit at any time, you MUSt cancel it the day before the DD is due.
There is nothing within the DD guarantee that says this and who cancels a DD on the exact date it is due? They may query it if they do not recognise it but not cancel it on the same day.
In addition many companies take DD's early, or don't give proper (or indeed any) notice of the amounts to be taken.That does fall within the DD Guarantee scheme and therefore should be a full refund on that basis alone.

[Michael Browne]

Originally Posted by yourbank

In addition many companies take DD's early, or don't give proper (or indeed any) notice of the amounts to be taken.That does fall within the DD Guarantee scheme and therefore should be a full refund on that basis alone.

Very often they will include in the 'Paying by direct debit' blurb something like:
We may apply for any instalment up to three working days prior to the due date etc

That means if the due date is a Monday, they will feel justified to take the money the previous Wednesday.

[yourbank]

"If there is a change in the amount to be paid or the payment date, the person receiving the payment (the originator) must notify the customer in advance."

This is the part of the DD guarantee scheme I had when I wrote this(I should know by know that you are not a mind reader )

[indebtstudent]

"That does fall within the DD Guarantee scheme and therefore should be a full refund on that basis alone."

You try arguing that. I'm with you here, DD guarantee is very poor indeed. It worries me that vast sums of money are collected by this method.

[yourbank]

The collection of Direct Debits does not worry me, but the application of the direct debit Guarantee when all criteria is met apart from the company receiving the money as the DD has been bounced and therefore no refund is actually permitted. It is ridiculous that this is not included in the DD scheme. Either the company is liable or the bank have to refund. This is a way too grey an area.

[indebtstudent]

I concur, if for example the transaction is fraudulent you would like to think the bank would waive the charge but I wouldn't bank on it (no pun intended).

I can clearly remember hearing customers of Nationwide being told to take it up with the company. In fact come to think of it this is what I remember.

If a customer doesn't recognise a DD we would essentially give them the money back whilst we raised a direct debit indemnity. Similar to the process for debit card transactions really. If it turns out to be genuine the customer would have to give this money back I presume - I never actually saw an instance where the transaction turned out to be genuine after investigation.

If the DD had been returned we couldn't raise a DD indemnity as it clearly stated on the form these could only be used where the dd had been paid.

I reall yhave no idea where this leaves the customer and IMO most banke and building societies don't exactly bust a gut to make sure staff are familiar with this sort of thing. I was probably the only person in my branch that knew the correct refund of charges policy.

There's no money in the DD guarantee so they will continue not to give a stuff. Nationwide was on Working Lunch several months ago for giving a customer duff information in relation to a direct debit.

Either there needs to be some clarification of the DD guarantee must be made much more precise - the secturiy of the scheme isn't really monitored by your bank or building soceity, unless there's any money in dealing with you they don't really care. Equally you cannot cancel the DD at any time as a lot of companies give themselves huge lee-way around the collection date.

I'm having fun here of course but I see what you are driving at, the DD guarantee is not satisfactory AT ALL.