Key Post Banks must now refund unauthorised direct debits

Brendan Burgess

Brendan Burgess

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From yesterday's Sunday Times. The Payments Services Directive came into force on 1 November.

It removes many of the risks associated with paying by direct debit. People were wary of giving the ESB, Bord Gais and other service providers open access to their bank accounts, because it can be impossible to get the money back if a bill is disputed. The directive, however, requires banks to refund direct debits on request within eight weeks of payment (of the direct debit).

Tom Conlon, of Bankhawk Banking Advisors, said: “If you have a dispute with your gym, for example, you can ask your bank to refund all direct debit payments made in the past eight weeks. You don’t have to give a reason and the money should be back in your account before you even approach the gym to argue your case
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Re: New rules on Direct Debits

Great news

This could become known as the "Setanta Sports law"!
 
Re: New rules on Direct Debits

I will not be surprised if a bank says you can't do that.
 
Re: New rules on Direct Debits

As Brendan said this is part of a very complex set of regulations known as SEPA (Single European Payment Area) and banks will have to comply
 
Re: New rules on Direct Debits

Jacky Skellies must be shaking in thier boots......
 
Re: New rules on Direct Debits

This is great news. I presume the banks will charge for returning them though?
 
Re: New rules on Direct Debits

Personally, I can't see this operating as smooth as it is made out to be.

I can still see banks asking 100's of questions and being obstructive before agreeing to refund any direct debit.
 
Re: If you query a Direct Debit - the bank must refund it without quibble

I will be truly amazed if this works as stated.
 
Re: If you query a Direct Debit - the bank must refund it without quibble

Firstly - let me identify myself. This comment is attributed to me in the Sunday Times. When discussing with ST, I did not perhaps adequately explain (mea culpa!) one clause which limits to cases where:-


"the amount of the payment transaction exceeded the amount the payer could reasonably have expected taking into account his or her previous spending pattern, the conditions of the relevant framework contract and the circumstances of the case"


Note that in many cases where a reasonable person is seeking a refund, some of the conditions above may be present. The clause will have to be tested before it is fully understood.​


​
 
Re: If you query a Direct Debit - the bank must refund it without quibble

Thanks Gulliver

So when I have described it as "no quibble" , I was wrong.

The onus is on the account holder to justify the reason to the bank to reject the direct debit?

Brendan
 
Re: If you query a Direct Debit - the bank must refund it without quibble

Hi,

Ireland isnt' the 1st one who is introducing this ''service''. Other countries already do have this service.

If you want want your paid direct debit refunded, the bank won't ask you any question.

In future it may be also possible to do it by urself if you are internetbanking.

The bank wont ask any question as its your and the creditor's problem.

Bank is a kind of a middle person.

(Edited by Brendan for clarity)
 
Re: If you query a Direct Debit - the bank must refund it without quibble

If it is anything like trying to cancel a DD in a certain state bank it could be a painful process. I tried to cancel a DD to Sky once. They told me they couldn't and I would have to have SKY cancel it. :mad: Only after demanding to speak to the manager did I get my wish. I can predict the same thing happening with this scheme.
 
Re: If you query a Direct Debit - the bank must refund it without quibble

The right to a refund is now enshrined in legislation. If a direct debit is posted to your account and it is not in line with previous spending patterns you bank is obliged to refund. The timeline for requesting this refund is 8 weeks after the debit date.
In the same way you are entitled to an immediate refund of an unauthorsed direct debit once it has been established that the direct debit was unauthorised. The timeline for a refund for an unauthorised direct debit is 13 months.
With regard to cancelling a direct debit the rules are quiet clear that you should contact your Bank who must accept the cancellation. It is also recommended that you inform the originator though you are not obliged to do so.
 
Re: If you query a Direct Debit - the bank must refund it without quibble

I can see the FSO being very busy sorting out the masses of complaints this will cause.
 
Re: If you query a Direct Debit - the bank must refund it without quibble

Brussels said:
The right to a refund is now enshrined in legislation. If a direct debit is posted to your account and it is not in line with previous spending patterns you bank is obliged to refund. The timeline for requesting this refund is 8 weeks after the debit date.

In the same way you are entitled to an immediate refund of an unauthorsed direct debit once it has been established that the direct debit was unauthorised. The timeline for a refund for an unauthorised direct debit is 13 months.

With regard to cancelling a direct debit the rules are quiet clear that you should contact your Bank who must accept the cancellation. It is also recommended that you inform the originator though you are not obliged to do so.
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My read on this is that if you want to cancel a DD that had been in place for some time, you will not meet the 'out of line with previous spending patterns'.

The more likely situatiuon is that you must prove to the bank (registered letter, documented acknowledgement by counter staff etc) that you instructed the bank to cancel the DD. Then wait up to 13 months to get the money back.

A bit of an improvement, but still far from perfect
 
Just noticed in my NIB online banking that my account was showing with a default setting of allowing all SEPA direct debits. I availed of the option to change this to a closed account, only allowing SEPA direct debits that I have explicitly approved. Here's NIB's explanation about these SEPA debits;

More info about SEPA Direct Debits
[broken link removed]
SEPA Direct Debit provides a convenient and secure means of paying bills across Europe. Instead of you making payments they will be automatically deducted from your account. Like a domestic Direct Debit you just need to give authority to the receiver of the funds via a mandate - once this is in place the funds can be collected from your account on a regular basis.

Fees and charges for a SEPA DD will be the same as those charged for our current domestic Direct Debits. You can stop a pending/future payment and refunds may be claimed within eight weeks of the Direct Debit date for an authorised transaction (mandate in place) and within thirteen months for unauthorised transactions.

If you want to have very tight control over your accounts you can switch them to "Closed Mandate List" or "Block your Account" from accepting SEPA Direct Debits.

Closed Mandate List
This means that only the following will be paid from your account

  • SEPA Direct Debits that have been registered by you in eBanking
  • SEPA Direct Debits, that appear on your pending/future transaction list, that you approve prior to the payment date
  • Regular collections of a SEPA Direct Debit already approved by you

If the SEPA Direct Debit is not registered or approved by you it will be rejected on the appropriate payment date. To select the 'Closed Mandate List' on the Regular Transfers screen select the "Edit settings for SEPA Direct Debits" button and select the appropriate option.

Block your Account
You can block your account so that it will not allow any SEPA Direct Debits to be collected from it. All SEPA Direct Debits presented on this account will be rejected. To activate this you need to contact your Branch.
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That NIB users should review their direct debit settings.

Dunno how other banks have approached these SEPA debits.
 
SEPA Direct Debit Schemes will in the coming years replace the existing Irish Direct Debit Scheme and will become the norm for direct debits. This is a political initaitive aimed at achieving a single payments area in Europe.
The new schemes offer added protection for payers with new refund and refusal rights for payers.
 
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