Cancelling Direct Debit

tech77

I posted a similar query in consumer issues but never really got to the bottom of things so i thought i'd post the query here to see if anyone here can help me.

Anyway just cancelled a direct debit.
I have duly written to both bank and company for it to be cancelled.

However the bank tell me that even though i've done all this that there's nothing stopping an unscrupulous company/originator coming along in a few months time and taking money from my account.

In other words the bank don't have an absolute say on cancelling a DD and the company, if it feels like it, can still have access to my account in the future.

I am informed that in practice this rarely happens but this is little reassurance TBH.
I'd prefer the bank and myself to be the only parties that have any control over my account.
However this does not seem to be the case.

Can anyone expert in this shed some light on this.

BuffyBot

Direct Debits are generally between the company and the customer. If it's cancelled, a company should not take anything further from your account, and if they try (and succeed, which is unlikely as the mandate should be cancelled with the bank also) if you have proof that their not entitled to it, your bank would then help you recover it.

tech77

BuffyBot wrote:

Direct Debits are generally between the company and the customer. If it's cancelled, a company should not take anything further from your account, and if they try (and succeed, which is unlikely as the mandate should be cancelled with the bank also) if you have proof that their not entitled to it, your bank would then help you recover it.

Thanks.
That's just it though.
The bank tell me they have cancelled the mandate.
They say however an unscrupulous company could still access my account in future if they wanted to.

So 'cancel the mandate' means nothing apparently

BuffyBot

It does. Companies who continually abuse the Direct Debit function (and 99.9% will not) would have their right to participate in the scheme cancelled.

faceman

tech77 wrote:

However the bank tell me that even though i've done all this that there's nothing stopping an unscrupulous company/originator coming along in a few months time and taking money from my account.

whoa teddy, if you dont mind me asking, who is your bank? If my bank told me that i would be on to their manager like a light and considering cancelling!

You have dont the correct thing, you are technically only obliged to cancel a DD with your bank in writing although it is good practice to cancel in writing with the company (originator) too.

Once a DD has been cancelled, no more DD's can be processed for that originator without you agreeing to it.

if the bank allows a transaction to go through after you have cancelled then the bank MUST refund you right away. They then process an indemnity claim with the company. The issue is then between the bank and the company. Either way the bank must refund you fairly promptly, even if they dont receive a refund from the company.

The dd process changed in recent years from a paper based method to a process method based more so on trust. (Called Originator Plus) It is possible that a company (in Ireland only) can debit your account without your authority, however this is a very serious breach of the scheme and can have reprecussions for the offending company. Either way, your bank must refund you.

Irish Payments Organisation (IPSO) administor the DD scheme and are very helpful. www.ipso.ie

stepbar

Getting setup on the Direct Debit originator system can take months and the bank dont take such applications lightly. They're usually signed off at regional level, such is the seriousness of the application. DD plus would not be authorised unless there is a clear business case for it and the company in question is trustworthy. If a company was found to be abusing the system, they would be removed and possibly fined for the breach.

Cancelling a Direct Debit with the bank is the only way to ensure that the payment is not debited. However, it is good practice to notify your service provider first and ask them to cancel your Direct Debit. The last thing you want is a debt collectors letter coming through the door for non payment.

tech77

faceman wrote:

whoa teddy, if you dont mind me asking, who is your bank? If my bank told me that i would be on to their manager like a light and considering cancelling!

You have dont the correct thing, you are technically only obliged to cancel a DD with your bank in writing although it is good practice to cancel in writing with the company (originator) too.

Once a DD has been cancelled, no more DD's can be processed for that originator without you agreeing to it.

if the bank allows a transaction to go through after you have cancelled then the bank MUST refund you right away. They then process an indemnity claim with the company. The issue is then between the bank and the company. Either way the bank must refund you fairly promptly, even if they dont receive a refund from the company.

The dd process changed in recent years from a paper based method to a process method based more so on trust. (Called Originator Plus) It is possible that a company (in Ireland only) can debit your account without your authority, however this is a very serious breach of the scheme and can have reprecussions for the offending company. Either way, your bank must refund you.

Irish Payments Organisation (IPSO) administor the DD scheme and are very helpful. www.ipso.ie

My bank is AIB.
I was definitely left feeling less than reassured with their explanation of things.

Basically they said:
1) We've cancelled the mandate.
2) Cancel the DD with the company also (which i have done of course)
3) However there is nothing stopping the company from coming along in a few months time accessing my account
4) In practice it rarely happens
5) If it did happen a refund would be given but it may be subject to me resolving any dispute i may have with the company first .
(That last bit was according to someone in IFSRA anyway).

So apparently the payment method (DD) seems to be intimately bound with any contract with the company i have and may be subject to resolving any dispute with the company first.

faceman

Im surprised that AIB said that to you. Re your point 5, thats completely untrue. If you have the proof to show you cancelled your DD as per the correct process, then regardless of whether the money is due by you or not to the company is irrelevent. The bank must refund you. I cant stress that enough.

tech77

faceman wrote:

Im surprised that AIB said that to you. Re your point 5, thats completely untrue. If you have the proof to show you cancelled your DD as per the correct process, then regardless of whether the money is due by you or not to the company is irrelevent. The bank must refund you. I cant stress that enough.

Cheers.
I sent a registered letter to the company and a letter to the bank (confirming with the bank later by phone) and kept copies of the letters.
Is this all the proof i need or have i missed something.

(Having said all that registered post only proves you sent a letter to the company on a given date, not that you sent on a particular request. Don't know how much that is worth to me TBH).

Also the bank refused to send me back confirmation that they received my letter of cancellation..
They said they did not do this routinely.
Is this normal?

They confirmed on the phone to me alright that they received it but sure what is that worth really.
They could turn around tomorrow and say they never got it.

tech77

faceman wrote:

Im surprised that AIB said that to you. Re your point 5, thats completely untrue. If you have the proof to show you cancelled your DD as per the correct process, then regardless of whether the money is due by you or not to the company is irrelevent. The bank must refund you. I cant stress that enough.

Actually i thought this was crazy myself.
But i asked a guy in IFSRA if getting a DD stopped (if something like this ever happened) was dependent on resolving a dispute with the company and he couldn't tell me categorically 'no it wasn't'.

He kept saying that he couldn't say for definite and that any unresolved dispute may need to be sorted before resolving a problematic DD issue.

I got the distinct impression from him that the payment method (DD) and the contract were not actually independent of each other (as i had thought).

faceman

unless the dispute was on whether or not you cancelled your DD then you are covered.

tech77

faceman wrote:

unless the dispute was on whether or not you cancelled your DD then you are covered.

Do you mean a dispute about whether you had cancelled it with the company or with the bank.

In my case the bank has acknowledged cancellation of the mandate (by phone atleast- whatever that means).
Do you think this covers me in the event of any dispute.

Even if a company turns around and says they never got a request for cancellation (even after i've sent it via registered post and kept a copy of the letter) would this be grounds for such a dispute do you know?

faceman

tech77 wrote:

Even if a company turns around and says they never got a request for cancellation (even after i've sent it via registered post and kept a copy of the letter) would this be grounds for such a dispute do you know?

No. You are only obliged to cancel with the bank who in turn inform the company. If they dont receive a copy of the cancellation from the bank, then thats an issue between them and the bank, not you.

Im actually in a simliar situation at the moment. I have a dispute with a company so i cancelled my DD with the bank who acknowledged the cancellation. I also cancelled my DD with the company who didnt process it (as they want my cash!)

So even though i have an open dispute with the company, the bank must honour my request to cancel the DD. The option of paying by DD lies with the consumer, not the bank or the company. As per the rules of the DD scheme, the company is not allowed to have funny clauses or conditions to their contracts with me to prevent me cancelling my DD. (e.g. having to give 2 months notice before cancelling a DD)

I cant attach the file as its too large, but there is a pdf file on the IPSO website with the full rules of the DD scheme which contains everything you need to know. Im sure everything will be fine.

tech77

faceman wrote:

No. You are only obliged to cancel with the bank who in turn inform the company. If they dont receive a copy of the cancellation from the bank, then thats an issue between them and the bank, not you.

Im actually in a simliar situation at the moment. I have a dispute with a company so i cancelled my DD with the bank who acknowledged the cancellation. I also cancelled my DD with the company who didnt process it (as they want my cash!)

So even though i have an open dispute with the company, the bank must honour my request to cancel the DD. The option of paying by DD lies with the consumer, not the bank or the company. As per the rules of the DD scheme, the company is not allowed to have funny clauses or conditions to their contracts with me to prevent me cancelling my DD. (e.g. having to give 2 months notice before cancelling a DD)

I cant attach the file as its too large, but there is a pdf file on the IPSO website with the full rules of the DD scheme which contains everything you need to know. Im sure everything will be fine.

Thanks.
Faceman everything you said there is exactly how i thought things should be (if only it were so simple for me ).
That was before the bank started to wreck my head with this.

I've talked to the bank and IFSRA at length about it and quoted the IPSO stance on this but to no avail. They still say that just because they cancelled the mandate it doesn't mean the company can't access my account in future if they wanted to.

What bank are you with if you don't mind me asking.
I don't know why AIB (and IFSRA) are telling me this $hit if it's not the case.
There must be some basis for it. I don't think there doing it for the fun of it somehow.

faceman

Your best bet is to ring IPSO for piece of mind. 01 663 6740. Perhaps the bank were covering their arse as its not impossible for your account (or anyone else's for that matter) to be debited in error.

dub45

faceman wrote:

Your best bet is to ring IPSO for piece of mind. 01 663 6740. Perhaps the bank were covering their arse as its not impossible for your account (or anyone else's for that matter) to be debited in error.

Unfortunately IPSO are on the side of the companies after all the scheme is run for them and not the payer. I have found the person in IPSO responsible for the scheme glib in the extreme - I complained about lack of 14 days notice from O2 and he was contemptuous because it was the only complaint he had had and kept empahsising that he would contact o2 and tell them he had one complaint with the emphasis on the one - the validity of the complaint did not interest him.

The fact is (and I have confirmed this several times with people working in the bank) because a direct debit does not have an individual identity like a cheque it cannot be blocked from reaching your account and this is the huge problem with direct debit system and cries out to be rectified.

There are surely data protection issues here too which should be catered for in the dd scheme. There is no onus on a company to remove your bank details from their system when a dd is canceled or even when you to another company. There are no data storage requirements in terms of confidentiality etc. This makes it very easy for a company to reinstate the dd.

As for the optimist above who talked about companies being punished for abusing the system there are many examples on boards over the years of bt abusing the dd system and there is no chance under the current system that any company will ever have the dd facility withdrawn. There is no proper complaints facility in the dd system - does anyone think thats an accident?:rolleyes:

What about the absence of a proper handbook for consumers on the direct debit system? Has anyone ever ever seen any information in bank branches on the direct debit system? Why are people told so little when they are approached to sign up for direct debit over the telephone? Why will ipso take no responsibility for additional charges passed on to consumers by the likes of the ESB and NTL when direct debits fail and the customers are not warned on sign up about such charges?

Also IFSRA's lack of professionalism in these matters is appalling! Whatever about taking action they should at the very least know how the schemes are supposed to work!