Not upheld: Direct Debit Guarantee - refusal to raise indemnity claim complaint against Clydesdale Bank plc trading as Virgin Money

Decision detail

Summary

P, a limited company, complained that Virgin Money failed to comply with the Direct Debit Guarantee Scheme by refusing to refund nine payments to company F (totalling £885.47) and payments to company A, claiming no contractual relationship existed. Virgin Money refused to raise indemnity claims without evidence of administrative error or merchant request. The ombudsman found no evidence supporting P's claims of prior cancellation attempts and noted that on 31 July 2025, Mr P had requested the payment to F be 'pushed through', contradicting his later assertion of no contract. The ombudsman concluded the Direct Debit Guarantee covers administrative errors only, not contractual disputes, and that Virgin Money acted fairly in requiring the originators to raise claims themselves.

The Ombudsman's reasoning

The Direct Debit Guarantee is intended to protect customers from administrative errors such as incorrect payment dates or amounts, not to provide automatic refunds for all disputed payments. The ombudsman found no evidence of administrative error by the payees. Critically, on 31 July 2025, Mr P had requested that the payment to F be 'pushed through', which contradicted his later claim of no contractual relationship. The ombudsman concluded that Mr P would not have requested the payment be made if there had been no contract. Therefore, Virgin Money acted reasonably in requiring the originators to raise indemnity claims themselves.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website