Key Post Be very careful about agreeing to Direct Debits

[Anne Marie]

I work for a Major Irish Bank, and I find that the vast amount of people, are clue-less, in regards to the difference between the two.

Lads, there is a HUGE DIFFERENCE, between a Standing Order, and a DIRECT DEBIT. Inform yourselves, and use the knowledge to stop yourselves being ripped-off.

Here's my brief on this subject:....ONLY ever set up a Direct Debit, to say..the ESB, Bord Gais, Eircom, etc....as you will know, that every bill will be different. A Direct Debit, should ONLY be set up, to pay bills which will always be of a varied amount, and due payment on a flexible date.

NEVER...EVER...set up a DIRECT DEBIT...to say...a Landlord, a Charity, a new Phone/Cable TV/Loan Provider/Service Company/Sibling/ect ect. By setting up, and signing a Direct Debit Mandate Form, do you realise that you are giving your complete Bank Details to that Company/Person...plus...also giving them your FULL PERMISSION to delve into your Account, and take As Much as they like, Whenever they like??
Yeah, now you know, why most companies/people...will expressly ask for a Direct Debit to be set up to pay them!!!

Even when Companies, such as SKY TV, request a Direct Debit, use your own assertiveness, and insist on a Standing Order. Coz if you don't, that E24 Service you've signed up for, will soon become a E37 Direct Debit, and there is NO onus on the Company to inform you!!!!

A Standing Order, is an instruction to your Bank, that Exxx will be paid, on xxx day, on xx frequency, that YOU allow, to xxx. Not a cent more, not a cent less, and ONLY on the date/day that you want. There is NO handling over of your Bank details, and every price increase, MUST be notified to you, in writing, for your approval.

Always opt for the Standing Order payment option, where possible, to protect yourself. NEVER EVER set up a Direct Debit...on your front door, or on the street, no matter HOW pressured you are being made to feel, to do this. DON'T DO IT!!!!

I deal with people every day, who started off paying xx amount, in a Direct Debit, only to discover, they have actually paid up to 10 times that amount, and there is NOTHING they can do. Not a thing.
Stupidity never comes cheap.

Also, ALWAYS cancel a Direct Debit, immediately, you decide that payment should no longer be paid to ...whomever!!! Direct Debits have been known to be paid onto Bankrupt Companies for years, because people have been careless. And, when this happens, you will NOT recover a cent. Also, a Direct Debit, which has been inactive for years, can suddenly re-start again, once the payment is requested.

Standing Orders, which have been over-paid, can always have the over-payments re-claimed, instantly.

Every day, I deal, with frustrated, angry people, who can't understand, why, their accounts have gone into melt down. Then, you'll find that they've been paying E600 monthly, for the last xxx years, for a car/house/piano/etc.......when the Debt was closed, in say, 2002. Then, in lots of cases, the Company has ceased business yonks ago, and the money has been paid, since then, into some chancer's account. Which means there is NO hope of ever re-covering the money debited.

Don't let this happen to you. Knowledge IS power!!! Use it.

 

[jpd]

Re: HUGE Difference Between a Standing Order and a Direct Debit.

Even when Companies, such as SKY TV, request a Direct Debit, use your own assertiveness, and insist on a Standing Order. Coz if you don't, that E24 Service you've signed up for, will soon become a E37 Direct Debit, and there is NO onus on the Company to inform you

I believe that the companies are supposed to inform you of all direct debits at least 10 days before the funds are taken.

 

[CCOVICH]

Re: HUGE Difference Between a Standing Order and a Direct Debit.

Surely you mean any change to an exsiting DD and not every dd taken?

 

[GeneralZod]

Re: HUGE Difference Between a Standing Order and a Direct Debit.

Good advice but how does anyone not notice EUR 600 being siphoned out of their account each month after it should have concluded?

 

[calt]

Re: HUGE Difference Between a Standing Order and a Direct Debit.

I have previously worked for 2 large Irish banks, and direct debits are either fixed or variable - fixed meaning same amount on same date each month, variable meaning variable amounts, but notice had to be sent in writing 15 days before amount is debited from a persons account. If an amount is taken that shouldn't be and the a/c holders bank is notified they had to refund the money to the a/c holder and then return the amount unpaid or seek a refund from the originator of the direct debit. From what I recall you have alot more security with a direct debit if money goes to an incorrect a/c etc than you have with a Standing order.

 

[Crugers]

Re: Huge Difference Between a Standing Order and a Direct Debit.

If you want to keep strict control of your money and your account then signing a DD may not be for you.

However Direct Debits are not the spawn of Satan.

They are only an instruction from you to your bank to allow a third party to withdraw funds from your account.
Any body i.e. banks, building societies, Bord Gais, ESB etc., involved in originating, sponsoring, receiving or paying Direct Debits sign up to a code of practice and guarantee to repay within certain time limits direct debits that shouldn't have been transacted on an account.
That's the theory (and the rules) but in practice it can be difficult to explain that to some banks/financial institutions because they just don't know the Rules of the Schemes.
There is a link to theRules of the Schemes in thread:


If you want to cancel a Direct Debit then just write to your Bank/Building Society and the originator (ESB/BordGais etc.) Sod's Law says you should confirm that both have received your letters!

 

[nlgbbbblth]

Re: Huge Difference Between a Standing Order and a Direct Debit.

I've worked in financial services for over 11 years and agree with Anne Marie.

Direct debits are a timebomb. Only sign up for one if there's a gun to your head.

The indemnity scheme is all very well but you will still be inconvenienced while you wait for the funds to be credited back to your account.

 

[Perplexed]

Re: Huge Difference Between a Standing Order and a Direct Debit.

I'd just like to add one thing.

It's become commonplace now for people to set up Direct Debits on their Credit Cards. You have even less control of these D/D's as most Credit Card companies cannot put a stop on them. You have to get them to return each one individually each month until the company you don't want to pay gets the message.

In this day & age with online banking etc I cannot understand how people do not keep a better eye on their a/c's. You can pay ESB, Telecom, Gas, NTL & lots of other bills online, where you are in total control of the date of the payments.
As a banker myself I much prefer to go this route.

 

[extopia]

Re: Huge Difference Between a Standing Order and a Direct Debit.

Perhaps this is a potential problem alright. But I've been paying bills in Ireland by DD and SO for over 10 years and there's never been a single problem (yes, I do keep an eye on my bank statement).

I suppose it's a matter of trust between the payer and payee. I'd never set up a DD (or SO for that matter) to a company I don't trust. If someone betrays that trust I would of course cancel the DD/SO (and the service too) right away.

Perhaps the OP would give us some more concrete examples of what can go wrong? Piano payments don't really cut it.

 

[nlgbbbblth]

Re: Huge Difference Between a Standing Order and a Direct Debit.

examples

- someone opting to pay their life / car insurance over 12 monthly payments and the first direct debit is for the full year's premium leading to their account being cleaned out and have no access to cash via ATM / laser.

- Gyms. Are a law onto themselves. Resurrecting old mandates and debiting people who have long since cancelled their membership.

Yes, people eventually get their money back but they have to go through a lot of hassle in the interim.
-

 

[CCOVICH]

Re: Huge Difference Between a Standing Order and a Direct Debit.

I have to say that I have used direct debits myself and have never had any problems. Not to say that problems don't exist, or that they aren't complicated/troublesome to rectify when they go wrong, but it isn't an issue for me to date.

Resurrecting old mandates and debiting people who have long since cancelled their membership.

But did they write to the gym and the bank to cancel the DD? When cancelling a membership/subscription, I will always say that I am also cancelling the direct debit.

 

[Dreamerb]

Re: Huge Difference Between a Standing Order and a Direct Debit.

One problem with utilities arises when there are disputed bills: I've seen this happening on telecommunications bills in particular - and the disputed amount is removed prior to query. Bills are supposed to be issued two weeks (min) before payment is due, but often aren't - e.g. my eircom bill often arrives no more than three or four days before payment is due, but is dated about ten days earlier. That leaves a bill payer very little time to register a dispute, esp in the case of DD where effectively the DD instruction arrives at the bank at about the time the payer gets the physical bill.

As a result, I avoid companies which will accept DD only, and have still had problems with a mortgage provider [ICS the supremely inefficient and incompetent... no affiliation] who kept debiting my account after mortgage was discharged. Having had good reason to know how awful they were, I had topped up my account to take full account of this, but they nicked €4500 from me before finally admitting that they were grossly in the wrong. My new mortgage is with a different provider, and I have a named person to yell at [sic: should obviously read "discuss the difficulties with"!] if they do stupid stuff.

 

[RainyDay]

Re: Huge Difference Between a Standing Order and a Direct Debit.

There is a further problem with DDs to credit card accounts, whereby even if you have closed the credit card account, the bank will still hold you liable for any further DD transactions which hit the account.

 

[nlgbbbblth]

Re: Huge Difference Between a Standing Order and a Direct Debit.

IBut did they write to the gym and the bank to cancel the DD? When cancelling a membership/subscription, I will always say that I am also cancelling the direct debit.

Yes, they wrote to the gym cancelling their membership and requesting that no further direct debits be taken out. A copy of this letter was sent to the bank.

Makes no difference - the bank could not block the account or stop direct debits from being taken out - unless they closed the account. Obviously the direct debit can be returned unpaid (reason 'mandate cancelled') if it is spotted on the day or the day after presentation - but no bank will undertake to watch any customer's account in such a way so the onus is on the account holder to notice such activity.

It's not like cancelling a standing order or putting a stop on a cheque.

In this particular case, the customer was entitled to a refund under the Direct Debit Indemnity Scheme as the copy of their letter proved that they have taken the necessary action to cancel the direct debit with the originator - but that takes a number of days to process and in the interim they were left without funds.

 

[Figgywiggy]

Re: Huge Difference Between a Standing Order and a Direct Debit.

This is so scary I am just after setting up a dd for my new landlord from my savings account should I and can I change it to a standing order?

 

[nlgbbbblth]

Re: Huge Difference Between a Standing Order and a Direct Debit.

This is so scary I am just after setting up a dd for my new landlord from my savings account should I and can I change it to a standing order?

I've never heard of rent being paid by direct debit.
Surely standing order (as it's the same amount each month) would be more appropriate?

 

[RainyDay]

Re: Huge Difference Between a Standing Order and a Direct Debit.

Yes, they wrote to the gym cancelling their membership and requesting that no further direct debits be taken out. A copy of this letter was sent to the bank.

Makes no difference - the bank could not block the account or stop direct debits from being taken out - unless they closed the account. Obviously the direct debit can be returned unpaid (reason 'mandate cancelled') if it is spotted on the day or the day after presentation - but no bank will undertake to watch any customer's account in such a way so the onus is on the account holder to notice such activity.

It's not like cancelling a standing order or putting a stop on a cheque.

In this particular case, the customer was entitled to a refund under the Direct Debit Indemnity Scheme as the copy of their letter proved that they have taken the necessary action to cancel the direct debit with the originator - but that takes a number of days to process and in the interim they were left without funds.

If you follow the logic of this scenario to its conclusion, it means there is no 'rule' that has to be set up on the banking systems to enable or permit a specific DD to take money from a specific account. So any DD originator can hit any account, regardless of whether the account holder has permitted or signed up for a DD. Could this really be the case for current accounts (though it seems to be the case for credit card accounts)?

 

[nlgbbbblth]

Re: Huge Difference Between a Standing Order and a Direct Debit.

Well the originator would need bank details (account number and NSC) for a start.

The bank is supposed to have a copy of the mandate which gives the originator authority to debit the account.

Any originator processing debits on random accounts where no mandate is held could be deemed to be abusing the rules of the Direct Debit Indemnity Scheme and be liable to have their membership revoked.

 

[panathon]

Re: Huge Difference Between a Standing Order and a Direct Debit.

I am now thoroughly confused. I thought that a direct debit was the lesser evil. ie if you are paying an amount to a company by direct debit and the right amount doesn't reach the correct account on day due, you'll get a call, whereas with a standing order it will put your account into minus and you will subsequently be charged by the bank for account going into minus. i don't quite understand how standing order is more beneficial??

 

[nlgbbbblth]

Re: Huge Difference Between a Standing Order and a Direct Debit.

I am now thoroughly confused. I thought that a direct debit was the lesser evil. ie if you are paying an amount to a company by direct debit and the right amount doesn't reach the correct account on day due, you'll get a call, whereas with a standing order it will put your account into minus and you will subsequently be charged by the bank for account going into minus. i don't quite understand how standing order is more beneficial??

Direct debit = agreement between the originator and the customer for variable amounts. Not controlled by the bank.

Standing order = customer pays a third party a fixed amount of money on a regular basis by debiting their bank account and crediting the beneficiary's. Controlled by bank.

End result = the same. Your account is debited an amount of money. If you have insufficient funds the bank will do the following:

(i) Pay the direct debit / standing order and leave your account overdrawn / over its limit thereby incurring surcharge interest and referral fees.

(ii) Bounce the direct debit / standing order. An unpaid fee will be levied and is usually the same for both DDs and SOs. The originator can choose to represent the direct debit, say a week later but for standing orders you will have to make a manual payment to the beneficiary.