Direct debits

This guidance is for banks and building societies. If you accept instructions to pay direct debits, you must offer customers the direct debit guarantee. This means that if you or the billing organisation has made an error in the payment of a direct debit, you (the bank or building society) must pay the customer a full and immediate refund.

Types of complaints we see

A customer may complain that:

• they didn’t authorise a direct debit payment
• there has been an error with the amount, date or frequency of payments
• they cancelled a direct debit instruction but payments have continued to be made

We also occasionally see complaints where a:

• direct debit payment hasn’t been made and a customer has lost out because of it
• customer makes a claim under the direct debit guarantee for payments going back over a long period of time

What we look at

We’ll ask to see your electronic records of the:

• set-up of the direct debit instruction, including your customer’s authority
• payment history related to the direct debit

This will help us to check if there has been an error and whether it was made by you, the billing organisation or the customer.

We’ll also take into account:

• the terms of the direct debit guarantee
• if relevant, any reasons why you think the direct debit guarantee didn’t apply in a particular case
• what you’ve done to put things right

Your customer might make a claim under the direct debit guarantee for payments going back over a long period of time. In this case, we think it’s fair for you to ask for evidence of an error before paying a full and immediate refund.

Handling a complaint like this

You should give your final response to complaints about payment services within 15 days. Find out more about time limits for businesses.

We only look at complaints that you’ve had a chance to look at first. If a customer complains and you don’t respond within the time limits or they disagree with your response, then they can come to us.

Putting things right

If we find you’ve done something wrong, we’ll ask you to put things right. This could include:

• refunding any charges and interest you’ve applied because of an error with a direct debit payment
• compensating the customer for any:
  • direct loss, such as a charge for a late payment
  • consequential loss from missing a payment (for example, the customer couldn’t make an insurance claim because a missed payment meant they hadn’t paid for their insurance cover)
  • any distress and inconvenience they’ve suffered

  We may direct you to apologise to your customer for allowing a payment to be taken from their account without their authority.

  Case Studies

  A customer complains about a bank failing to cancel a direct debit

  Ed asked his bank to cancel a direct debit. But they didn’t and payments continued to come out of his account.