DIRECT
DEBITS AND STANDING ORDERS
On Your Behalf
deals with your banking
problems
Update on direct debits - 1st March 2004
A
few weeks ago we heard from a listener who couldn’t understand why it took so long to move money
between his account and his son’s – where is it and
who’s using it in the interim he wanted to know?
Well it’s an issue that’s been bothering the Office
of Fair Trading. They say the delay in clearing cheques and processing
electronic payments is worth an estimated £60 million a year
and just this week the OFT has said with standing order, telephone
banking and internet payments, customers should continue to get
interest until the money is credited to the payee's account. And
with cheques, relevant interest should be transferred from the
second day at the latest.
The OFT also want more information on clearing times available
to consumers.
The OFT has no powers to force the banks to accept their proposals
- regulations are left to the industry’s own voluntary banking
code.
The British Bankers Association has said they will review the OFT
response alongside other responses.
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Like direct debit - whatever you’re buying, whatever you’re
signing up for, whatever club you’re joining, they all seem
to want your bank details and sign you up for a direct debit or
standing order – in fact ¾ of the population uses
Direct Debit as a payment method. And that’s fine if it
suits you –
Sean e mailed to ask -
"Why does it take 5 days to transfer money from one bank account
to another, and who has the use of the money in the interval?
I found this problem when I was setting up a standing order as
an allowance for my son who is at university. We are both customers
of the same bank – Bank of Ireland- but he uses a different
branch about 2 miles from mine. He wanted to receive the money
at the start of each month so I set it up for the 1st – he
soon complained that he wasn’t getting it until the 5th – so
who did? And why in these days of hi tech does it take so long
anyway? Surely this is not fair?"
Good question Sean.
So where does our money go? And who’s making interest on
it while it’s in limbo?
The Bank of Ireland gave us this statement
Bank of Ireland is required
under the Banking Code to inform customers of the time taken
to clear cheques. In Northern Ireland the cheque clearing system
is operating under the Belfast Clearing Rules which are agreed
by the Northern Ireland Bankers’ Association.
What we tell
our customers is: It is very important to note that when you
lodge cheques into your account, you cannot withdraw your money
straight away. Cheques have to go through what is known as the “clearing
process”. In other words, we have to obtain payment from
the bank of the person or business who issued the cheque.
As
a general rule, please allow at least three working days for
cheques drawn on banks in Northern Ireland to clear. However,
if a cheque is returned to us unpaid, this normally takes up
to five working days. Therefore, we will not usually allow you
to draw against cheques lodged until after this period has passed.
If you have used the credit transfer facility in another branch
or bank to lodge cheques to your account, the clearing process
can take a minimum of five working days. For cheques drawn on
banks elsewhere in the UK, you should allow five working days."
On Your Behalf also hears from a man who feels equally strongly
about direct debits. He tried to sign up with BT Mobile recently
and was told the only way he could do so was by Direct Debit.
So why does he not have a choice?
BT tell us that for customers to BT Mobile it is direct debit or
nothing – and BT weren’t able to tell us if they had
plans to make alternative forms of payment available to their customers
Other mobile providers do offer a choice, but at a cost – in
most cases if you don’t pay by Direct Debit, you pay an extra £3
a month.
So why are the big companies so keen for us to pay by Direct Debit – and
is it fair to penalise us if we don’t?
YOUR COMMENTS
A Bangor man wonders
• Why does BT make us pay our line rental a quarter ahead?
And another listener
says
• I have always used the automated
paying service for my mobile phone bill. I changed contracts a
month ago. They added £3 per month to standard tariff because
I wouldn't pay by direct debit. I complained about this and they
said if I went into their shop and paid my phone bill there is
future, they wouldn't charge me the extra £3.
• The underwriter of
our House insurance recently changed and they said my direct
debit wouldn't change, but my bank charged me £4.50 to
set up a new direct debit account. First the bank denied it,
but eventually said they would credit the amount to my account.
They admitted to me that if I hadn't noticed, they wouldn't have
repaid the amount. How many people haven't noticed these charges?
Tell your listeners to keep a good eye on their accounts!
• I was trying
to get a TV license refund for a deceased relative. What annoys
me is that they are very quick to jump on you for not paying
your license but I have been waiting 6 weeks to get a form
to apply for the refund.
A.P.A.C.S (Association for Payment Clearing Services)
Mercury House,
Triton Court,
14 Finsbury Square,
London EC2A 1LQ
Tel: 020 7711 6200
Fax: 020 7256 5527
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