Follow up Review of Clause 19 (Direct debits) – May 2012

During 2010 and 2011 the CCMC carried out a follow up to its 2009 Inquiry into Banks’ compliance with Clause 19 of the Code –Direct Debits. The follow up Inquiry took the same form as the original, a shadow shopping exercise with a total of four telephone calls to each bank.

This results of this second Inquiry demonstrated that that the levels of compliance had not improved since the first Inquiry, with examples of non compliance recorded. Only 33% of calls were judged to be fully compliant. The ability for customers to cancel direct debits at their bank is a powerful safeguard for customers, especially for those who are in financial difficulty. Failure for banks to accept or act on notice of a direct debit cancellation request may cause customers who are already in financial trouble to be further impacted when exception and penalty fees are imposed on the account.

The CCMC is concerned that the level of compliance with clause 19 of the Code has not improved since the original Inquiry report was published in 2009. The increased proportion of non compliant responses over the period demonstrates that banks must be conscientious in providing training and information to staff in respect of direct debits. Banks must also have in place sufficient quality assurance and monitoring to identify and correct areas of non compliance.

A full copy of the Inquiry Report can be found here.