Direct Debit "Indemnity Claim" and the Credit file


#1

Hi there,

I was wondering if any of you (@MIROW? @Merkitten?) can provide further guidance on this:

My energy provider (Economy Energy) just really pi**ed me off really badly. Long story short, they collected double the direct debit amount. They admit their mistake and promise to refund it, but it’d take 14 working days - given the Christmas holidays that’s around 4 weeks, I think. (Plus, I’m furious at them, because I called them 5 times over a one month period to prevent them from doing this, and was promised they wouldn’t do it, but they did it anyway, and I’d just like to teach them a lesson - futile, I know …)

So, I want to file an indemnity claim with my bank. As such this is simple, but: Will that affect my credit file? What other actions can I take to limit the impact?

Thanks!


Bulb Feedback?
(Jamie 🏳️‍🌈) #2

The Direct Debit Guarantee is a very simple piece of protection for you as the customer. You must be notified if there is a change to the amount, date or frequency of the debit, by the organisation taking he money. If they fail to do this, you are entitled to a full and immediate refund by your bank.

This won’t affect your credit file. Simply call your bank and ask them to refund the incorrect amount. Your bank will credit your account straight away.

You don’t even need to make contact with the organisation, if you don’t want to. Just watch that your debit goes back to normal next month, and if it’s incorrect again, invoke the guarantee again with your bank (and consider whether you still want to keep on giving the organisation your custom!!)

All banks that allow Direct Debits to be set up provide this guarantee. More info here:


#3

Thanks. I am aware of the direct debit guarantee. My concern (and expectation, really) is that the provider might report a default to the credit referencing agencies.

(And, no, I don’t want to give them my custom any longer! I have opened raised a complaint and asked for a waiver of the exit fee as a possible resolution. I’ll see what they say.)


(Jamie 🏳️‍🌈) #4

They shouldn’t have reported you to the credit reference agencies because, as far as they are concerned, you have paid. The bank deals with the organisation in the background regarding the direct debit.

However, organisations do also make mistakes regarding reporting to CRAs. A clue could be a rogue late payment fee on your account, when you have paid. I’d keep an eye on the free services which monitor the three CRAs (Noddle, Money Saving Expert Credit Club and Clearscore) just in case. Again, there are means by which an organisation has to repair your credit file if they make a mistake, but this shouldn’t happen because you invoke the Direct Debit guarantee.

Oh, and make sure you keep/download your bills from the energy company which show how much you owe and how much you have paid, and your bank statements.


(Jamie 🏳️‍🌈) #5

I guess some cr*p energy companies try it on over the winter and attempt to raise a monthly fixed DD, even when an energy account is in credit, on the pretext that ‘you use more energy in the winter’. If you are in credit they really shouldn’t report you to the CRA. I guess if you are in debt to them, as long as they give you the correct notice, they are entitled to raise your payment.


(Sacha) #6

I put a DD claim in to Monzo when my previous energy provider charged me after I had settled the account. If you are definitely in the right as regards liabilities or otherwise there should be no issue and it’s never appeared on my credit reports.


#7

I’m not so sure about this. I probably should clarify this:

They were supposed to collect a DD of £65, but collected £130 instead. (No-one that I spoke to from Economy Energy - and I spoke to 5 different people - could explain why they had done so.) The only option I have when putting in an indemnity claim is to return the full payment.

However, as per the agreement I should’ve paid £65, so there would indeed be a “missed payment” somewhere if I return the full payment, despite me being in credit with them. As such I think they would probably be technically correct in reporting this to the CRA.


(Jamie 🏳️‍🌈) #8

I expect, if they are reasonable, they would just allow you to repay the correct amount of £65 though, either by debit card or on your next direct debit (having given you sufficient notice!)

If you’re in credit you could either ask them to take it from there, or even return your entire credit balance. Energy companies aren’t known for their fairness, though, so they might then put your monthly amount up so they don’t lose out.

Personally, I’d just offer to pay the correct amount over the phone, ensure they are happy with this and that they won’t trigger any kind of fee or report to the CRAs and then watch my account like a hawk, and give my notice as soon as I was able. I wouldn’t think they’d trigger an automated report so soon after one mistake.


(Nick Perry) #9

The advice above is sound. I.e. invoke the guarantee to reclaim the full debit. Offer to pay the correct amount - or do so unilaterally, immediately, using the correct reference.

The automated reporting to the credit reference agencies should show no anomaly but even if you get caught in a kafkaesqu scenario where it does it won’t realistically affect your rating and in any event will clear itself in short order. And if it doesn’t, you are only a couple of letters away from challenging it.

Nick


#10

If your disagreement with them does result in any problems there are some things you can do.

Firstly if they made you go overdrawn at your bank and that resulted in charges or interest you would not have otherwise paid you can seek to reclaim that from them.

Secondly if they making you overdrawn makes that appear on your credit file you can write a note to the credit reference agency noting the error made by the energy firm and it’s impact on your current account and ask it to be attached to your file.

Thirdly if they screw up and try to take payment next month despite the overpayment this month and you rightly refuse payment until the account is rectified they may be petty and try and put a marker next to your energy bill payments on your CRA file. Again you can write to the CRA with a notice asking it to be attached to your account pointing out the error.

When companies credit reference you for loan or card applications they should get a copy of any notice of correction (and any notices of financial disassociation) with your file.

Personally when I had a screw up by EON (customer service/billing messed up) I contacted their CEO’s office and they ensured the problem was resolved properly. Never be afraid to escalate it higher up.


(Allie) #12

I sure wouldn’t want to provide legal advice, but I’d have the same concern as you, and I would not pursue it until I’d given them the opportunity to make it right in the timeframe they’ve promised. It’s just less to make complicated.

Obviously, you’d be able to fight it if they reported it unpaid to a CRA since you had paid it, once! But, and here’s the key thing - why make the whole thing more confusing? Personally, I would wait and let them have a chance to make it right.


(Terry) #13

I would also like to know a bit more about this, I recently done this with my legacy bank, who had to take lots of details and then told me that I will receive a refund within 24-48 hours providing there are no issues, when I queried that it states I would receive an immediate refund she informed me that this is from the time they conclude their investigation. I was wondering if this was correct? I was always under the assumption that it was an immediate refund from opening the claim and if they find that ok lying or it’s not a valid claim they would put the charge back the account.


#14

Thank you all for your invaluable feedback! I have decided to take a deep breath and wait for them to refund the payment. I’m grateful to not need the money immediately and I don’t want to fight them if they do something crazy with the credit report.

@terryharman Indeed, that has always been my understanding as well.