Not upheld: direct debit notification and account administration; alleged failure to provide advance notice of increased direct debit amount; application of default complaint against Capital One (Europe) plc

Decision detail

Summary

Mr J complained that Capital One failed to notify him in advance that his July 2022 direct debit would increase from £30 to £30.28, contrary to the direct debit guarantee. He argued that had he been properly notified, he could have taken action to prevent the payment failure, which he claimed led to additional charges and ultimately a default on his account. Capital One provided evidence that the June 2022 statement, issued on 19 June 2022, clearly showed the July 2022 payment would be £30.28, more than five working days before the collection date. The ombudsman found this statement constituted sufficient advance notice under the direct debit guarantee and rejected Mr J's argument that notification must be by SMS or email. The ombudsman further found that the default resulted from six consecutive missed payments and arrears that had accumulated before the July 2022 payment, not from the alleged notification failure. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman concluded that Capital One satisfied the direct debit guarantee requirement by providing advance notice of the increased July 2022 direct debit amount through the June 2022 statement, which was issued on 19 June 2022, more than five working days before the collection date around 15 July 2022. Although Capital One could not evidence SMS or email notifications, the ombudsman found that the statement itself was sufficient notification and that the direct debit guarantee does not necessarily require notification by SMS or email specifically. The ombudsman rejected the argument that an online statement did not constitute adequate notice. The ombudsman further found that the default was not caused by the alleged failure to notify of the increased direct debit amount, as the account had already fallen into arrears following the missed June 2022 payment. The increased July 2022 amount was necessary to bring the account up to date, and Capital One was entitled to apply interest and charges following missed payments in accordance with the credit agreement terms. The ombudsman found no evidence that Capital One acted contrary to the Consumer Credit Act provisions regarding interest on default sums.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website