Not upheld: Direct Debit refund claim and indemnity claim under Direct Debit Guarantee complaint against TSB Bank plc

Decision detail

Summary

Mr S complained that TSB Bank plc refused to refund direct debit payments made under a loan agreement with another bank, claiming he was never informed of the payment dates and amounts between February 2023 and July 2024. TSB declined the refund request and refused to make an indemnity claim under the Direct Debit Guarantee. The Ombudsman found that TSB acted reasonably because the Direct Debit Guarantee only covers errors in setup or collection, not contractual disputes or missed communications. The significant delay in raising the claim (November 2025, 16 months after the final payment) and Mr S's continued payment for nearly two years without complaint suggested no genuine error had occurred. The complaint was not upheld.

The Ombudsman's reasoning

The Direct Debit Guarantee only covers errors in setup or collection, not contractual disputes. The loan agreement explicitly stated that payment dates would be communicated in writing. The guarantee notes confirm that missing such communication is not grounds for refund. Given that Mr S made payments for nearly two years without complaint before claiming non-notification 16 months later, it was reasonable for TSB to believe he had been notified. The delay in raising the claim raised questions about whether there was a genuine error. Additionally, refunding the direct debits would not discharge Mr S's contractual liability for the loan instalments, making an indemnity claim unreasonable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website