A long-standing consumer bugbear is the runaround they often get from merchants and banks when they ask for a direct debit to be cancelled. A banking oversight body has found that banks do a better job of this than in the past but there are still significant problems.
In March the Banking Code Compliance Committee conducted a mystery shop to check banks’ compliance with their obligation under the Banking Code of Practice to cancel direct debits on request.
Under Chapter 34 of the code, banks must promptly process a customer’s request to cancel a direct debit.
The BCCC said that 71 per cent of interactions indicated that the bank would comply. Only three of 19 banks surveyed had a 100 per cent compliance rate, and five had non-compliance rates of 50 per cent or more.
In 2018, when the BCCC last checked banks’ handling of direct debit cancellations, the compliance rate was 44 per cent.
BCCC chair Ian Govey said that while compliance has improved when compared with historically low rates, the result is still a significant cause for concern.
Govey said: “It means that 29 per cent of the time a customer may be given incorrect information. This is far below the BCCC’s expectations.”
The BCCC wants banks to take additional steps to improve compliance, including putting better information on websites, improving staff training and communication, and undertaking additional monitoring activities.
“Banks must not ask or suggest that the customer needs to first contact a merchant or service provider to cancel a direct debit. The bank can suggest that the customer also contact the merchant or service provider to inform them that the direct debit has been cancelled,” the BCCC said.
The BCCC said some customers were told it would be easier for the customer to cancel the direct debit via the merchant.