Banks must introduce better safeguards for customers who pay bills by direct debit, a consumer watchdog has warned.
Guarantees to consumers do not always work, say Trading Standards
Trading Standards says that businesses take far too long to sort out their mistakes with payments, leaving customers out of pocket.
It adds that the government should intervene with legislation if industry fails to take action.
The banking industry says mistakes are few and far between. Its advice is to always check bank statements carefully.
Trading Standards say guarantees that banks will put right cases where the wrong amount is deducted do not always work.
Tony Northcott, of the Trading Standards Institute, said that legislation should be created to protect customers should direct debit payments go wrong.
"With more and more companies demanding payments this way, there has to be something put in place to stop people battling these big companies on their own," he said.
"There's a need to get their stall in order before demanding payments in this way, as it would appear the system is not infallible."
He added that customers should be reimbursed for any losses resulting from mistakes with the firm responsible paying back any interest made on the payment, as well as compensation.
The call comes after 400,000 workers were not paid on time due to problems with the banking system.
Have you been affected by mistakes with direct debit payments? Do you think better safeguards are necessary?
HSBC bank paid a direct debit to TV Licensing which wasn't ours - and was in a completely different name. HSBC said I would have to take the matter up with TVL. Eventually I was told to reclaim the money by filling in a form etc. I was annoyed and told them I expected to be reimbursed without filling in forms. Eventually they agreed to credit the money back into our account. Alan Brook
Alan Brook, Huddersfield
My company was direct-debited a few hundred pounds by Sky; we've never had a subscription, nor given our bank details to Sky. Sky would do nothing except suggest we go to the police with a case of potential fraud. Our bank reversed the charge the same day, but told us any large company on the DD scheme can request any amount of money by DD without a signed form or other evidence - basically the banks trust Sky not to get it wrong. I now will not allow any DDs from my business account.
Silas Denyer, London
Many companies dictate the date funds are collected from bank accounts. This should not be the case; the consumer should have the opportunity to choose the date to enable them to align their direct debits with their salary payment.
Scott Dawson, Manchester, UK
When a large telephone company direct debits in error an account that is nearly overdrawn then the bank will not stop payment of the direct debit, even if told to in advance. Then the account goes overdrawn and the bank makes a large additional charge for this overdraft. With both the bank AND the telephone company benefiting financially; why would they rush to sort it out? The telephone company eventually makes an offer of a reduced future bill or free calls. The moral is NEVER allow payments by direct debit - the people who benefit are NOT you.
Ron Ellis, Aylesbury bucks
I've had problems with Direct Debits, where companies have taken the wrong amount, but I have to say that my bank handled them flawlessly. Dealing with the companies was awful, but my bank just handled the whole lot for me. I'd like to see legislation to force companies to behave, not the banks!
Nic Brough, London
My bank account was raided! Two payments per month were being paid to the local water company and BT for quite a while. One payment was DD, one standing order. My bank, Halifax, blamed the companies, in turn they blamed Halifax, I was in the middle of this finger pointing with a bank charge due to all this!! This was 12 years ago, so it is not a new problem. Check all your statements.
A Direct Debit was fraudulently set up on my account by someone to obtain a mobile phone. There was no check by my bank that the fraudster's address matched my own, nor did they inform me that the DD mandate had been set up. Either would have detected the fraud at an early stage, and ought to be standard practice.
John Whythe, Newport, S E Wales
The problem with a Direct Debit is the person being paid can request any amount of money and despite the Direct Debit guarantee saying they must give 10 days notice to any change, the majority don't do this. I got caught out with Sky, a normal £42 per month payment shot up to £232 in one month, leaving me without any money. Luckily my bank refunded me immediately, however, Sky said its liability was nil, as a Direct Debit can be taken for any amount.
Iona Pippen, Caerphilly, Mid-Glamorgan
I don't think consumers should be penalised for choosing to pay their bills other than by Direct Debit. BT (British Telecom) have now introduced a £4.50 penalty per quarter. Outrageous! The Irish government is legislating against this for Eire, so why can't we expect the same from the British government?
Mike Mitchell, Spalding, England
I once paid my Halifax credit card balance in full (£1400) by cheque and gave two weeks notice to cancel my direct debit. However, it still went through so I'd ended up paying £2800. HSBC then charged me for exceeding my overdraft. Solution: I walked into an HSBC branch, sat down with them, and called the Halifax from their phone. I said "I'm not paying - you two decide - debate!" and left them to it. No messing, Halifax coughed up and all were helpful in the end. The d/d system is useful - but too often cancelling direct debits simply goes painfully wrong!!!
John D, London