Not upheld: Direct Debit Guarantee refund claim - contractual dispute complaint against Bank of Scotland plc trading as Halifax

Decision detail

Summary

Mr C complained that Halifax failed to process a refund under the Direct Debit Guarantee for payments to an energy provider made over 10 years (July 2011 to February 2022), claiming the payments were made in error as he had no contract with the provider. Halifax declined the claim on the basis that Mr C had authorized the direct debit instruction. The ombudsman found that Mr C's dispute was contractual in nature, not a payment error, and therefore fell outside the scope of the Direct Debit Guarantee. The ombudsman upheld Halifax's decision, noting that Mr C had acknowledged setting up the direct debit and that he would likely have raised the issue sooner if it were a genuine payment error. The complaint was not upheld.

The Ombudsman's reasoning

The Direct Debit Guarantee protects against payment errors, not contractual disputes. Mr C authorized the direct debit instruction and his complaint concerns whether a valid contract existed with the energy supplier, which is outside the scope of the guarantee. The fact that Mr C received statements for over 10 years without raising the issue earlier suggests he would have done so immediately if a genuine payment error had occurred. Banks are entitled to conduct cursory investigations before processing claims to ensure they meet the guarantee criteria and to prevent illegitimate re-debits.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website