Not upheld: Direct Debit error and refund dispute complaint against TSB Bank plc

Decision detail

Summary

Mr D complained that TSB Bank paid a Direct Debit to a third-party company after he had obtained a refund under the Direct Debit Guarantee, claiming the original payment was made in error after his contract had concluded. TSB initially refunded Mr D but then allowed the third-party to reclaim the funds after the company provided evidence of advance notification. The ombudsman found that while an error likely occurred, TSB properly followed the Direct Debit Indemnity Claim process and was not obligated to arbitrate what appeared to be a contractual dispute between Mr D and the third-party. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while an error likely occurred, the key question was whether a Direct Debit 'error' had actually happened under the DDG. The third-party company was entitled to defend the Direct Debit Indemnity Claim and provided evidence of advance notification, which persuaded TSB that the funds had been correctly claimed. The ombudsman concluded TSB could not be expected to arbitrate a contractual dispute between Mr D and the third-party, and that TSB followed the proper DDIC process. TSB's role was limited to processing claims through the established procedure, not determining the merits of underlying contractual disagreements.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website