Not upheld: Direct Debit Indemnity Claim rejection / Unauthorised payments dispute complaint against TSB Bank plc

Decision detail

Summary

Mr J complained that TSB wrongly rejected his Direct Debit Indemnity Claims for eight payments totalling between £6.70 and £819.55 made to three merchants between July and October 2025, which he claimed were unauthorised. TSB rejected the claims as they did not fit under the Direct Debit Guarantee Scheme and advised Mr J to contact the companies directly. The ombudsman found that TSB acted reasonably because the DD instructions were set up electronically through AUDDIS without a paper mandate, meaning TSB lacked the detailed originator information needed to verify whether a payment error had occurred. The ombudsman explained that the Direct Debit Guarantee Scheme is intended to address payment errors, not contractual disputes between customers and merchants, and therefore it was appropriate for TSB to ask Mr J to contact the originators directly to establish how they obtained authority to debit his account.

The Ombudsman's reasoning

The Direct Debit Guarantee Scheme is designed to protect customers from payment errors (incorrect date or amount) made by banks or originators, not to resolve contractual disputes between customers and merchants. Since the DD authority was set up electronically through AUDDIS, TSB lacked the detailed originator information necessary to establish whether a payment error had actually occurred or whether the eligibility criteria for an indemnity claim had been met. Therefore, it was reasonable for TSB to ask Mr J to contact the originators directly to establish how they obtained authority to debit his account, as the payments went to the merchants and not to TSB.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website