I have a question about the legal rights of the parties involved when a direct debit authority is cancelled with a bank by the customer.
In this case, the customer cancelled the monthly services he was receiving from the company (over the phone) and the company correctly used the direct debit authority to charge the customer with the final amount that was owing.
The customer then cancelled the direct debit authority with the bank (over the phone) and the bank acknowledged that they had cancelled it as instructed (also by phone).
About 4 weeks later, the company sent the customer a further invoice which was said to be an adjustment of the final invoice that had been charged to the customer’s bank account 4 weeks earlier. The company said this amount would be direct debited to the customer’s account.
So, the customer rang his bank and asked whether this invoice could be charged against his account. The bank advised the customer that, although it had cancelled the direct debit authority as requested, the company had the right to reinstate the direct debit based on the original authority it had from the customer if the company considered that it was still legally owed money by the customer.
The customer then advised the bank that the latest invoice from the company was in dispute and that he did not give the bank his authority to charge his bank account with any amount the company might charge on a reinstated direct debit.
However, the bank advised that it would be obliged to charge the customer’s account with amounts charged by the company using a reinstated direct debit, unless the customer could supply evidence that the company had agreed in writing that the direct debit authority had been cancelled by them.
So, the lessons to be learned from this case are that, if you want to cancel a direct debit, make sure that you advise the bank in writing of this instruction and that you also obtain in writing the bank’s confirmation that this has been actioned. Also, you should cancel in writing the direct debit authority with the company supplying the services and get their agreement to this, also in writing.
I had not heard before of a company having the right to reinstate a direct debit authority without the approval of the customer. Can anyone advise me please whether the bank’s advice on this matter is correct in law. Thanks for your help.