Not upheld: direct debit indemnity claim handling and administration complaint against Lloyds Bank Plc

Decision detail

Summary

Mr B complained that Lloyds unfairly rejected his direct debit indemnity claim after monthly payments of £100 to company H between June 2022 and November 2025 were allegedly not received by H despite debiting his account. Lloyds had set up the direct debit on Mr B's request using H's payment instructions and rejected the indemnity claim when H rejected it. The ombudsman found that Lloyds made no error in setting up the direct debit using information provided by the pre-vetted organisation H, and that the Direct Debit Guarantee only applies where an error has been made. Since no error by Lloyds was demonstrated and insufficient evidence of an error by H was provided, the complaint was not upheld, with the ombudsman concluding the issue likely lay with H's allocation of the received payments.

The Ombudsman's reasoning

The ombudsman found that Lloyds did not make an error in setting up the direct debit because it used account information provided by H that matched Mr B's account profile, and it had no reason to question the beneficiary account details. The Direct Debit Guarantee only provides refunds where an error has been made by the bank, building society, or organisation. Since no error was made by Lloyds and insufficient evidence was provided to demonstrate an error by H, the guarantee did not apply. The issue appears to lie with H's allocation of the received payments, not with Lloyds' administration. Lloyds provided appropriate assistance by explaining the rejection, detailing why no error occurred, and advising Mr B to contact H directly.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website