Direct debit cancellations still a headache for consumers
A long-standing scarecrow for consumers is the workaround they often get from merchants and banks when they ask for a direct debit to be canceled. A banking supervisor has found that banks are doing a better job than in the past, but there are still significant problems.
In March, the Banking Code Compliance Committee organized a mystery workshop to verify that banks are complying 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 71% of interactions indicated the bank would comply. Only three of the 19 banks surveyed had a compliance rate of 100%, and five had non-compliance rates of 50% or more.
In 2018, when the BCCC last checked the banks’ treatment of direct debit cancellations, the compliance rate was 44%.
BCCC chairman Ian Govey said while compliance has improved from historically low rates, the outcome remains a major cause for concern.
Govey said, “This means that 29% of the time a customer may receive incorrect information. This is well below the expectations of the BCCC.
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 oversight activities.
“Banks should not ask or suggest that the customer should first contact a merchant or service provider to cancel a direct debit. The bank can suggest that the customer also contact the merchant or the service provider to inform them that the direct debit has been canceled, ”said the BCCC.
The BCCC said some customers have been told it will be easier for the customer to cancel the direct debit through the merchant.