More control over Direct Debit

Feedback & Ideas
21

Have you actually ever used direct debit? It does not let a company to take whatever they want. They must give you advance notification of more than 10 days of the amount that will be requested and tell you when it will be taken, giving you ample amount of time to raise the issue with them / check correctness, or discuss alternative payment, or cancel direct debit.

The real no warning or control is continuous payment authorization / subscription with bank cards - those indeed appear completely out of the blue, without any structured notifications.

Thus to me, direct debit wins over card recurring payments.

2 Likes
22

The default is at least 10 days notice if the amount has changed, otherwise a single notification before the first collection is OK. Also the collector can agree a shorter notice period with the customer. My ISP is 5 days and Go Cardless is 3 days, I think.

The important thing is that you’re in control, though, so if anything unexpected happens you can ask your bank to immediately reverse it.

1 Like
23

I thought I’d give an update. I’ve gone ahead and started using Direct Debit a bit, as your basically forced to by energy companies, as they are allowed to charge you more to pay in other ways (a completely different discussion of how that’s crazy…)

But yea, basically Direct Debit is worse than I thought it would be, of course its hard to tell how much Monzo is able to do to improve this.

When you setup a new Direct Debit, at some point, in the next few days, Monzo tends to tell me about it

  • lets just pause, in the modern world, even this is nuts, why its not immediately, with some are you sure you want this, like when you pay by card online… beyond me… anyone with my account number and sort code can do this…

It appears Monzo doesn’t know the amount until a couple of days before the payment is taken - even though the company is supposed to tell me two weeks in advance, as that tends to come by physical post it mostly gets ignored… I guess its good that Monzo guesses its gonna be the same as last time, and give you a list, but its not great for budgeting when its all ‘expected’

All the energy companies have been taking money and refunding money every month, so that’s fun. Monzos running total for a company doesn’t seem to include the refunds, which because they are all doing it, makes the running total a bit useless.

Clear a lot more data needs to be passed between the banks and the companies using DD

24

If you want your energy company to charge you the same amount every month, you need to speak to them. This is nothing to do with Monzo (or any bank), it’s the agreement you made with the energy company.

2 Likes
25

And Monzo tell you before any money is taken so if someone set you up to pay RSPCA you could easily cancel it.

They don’t need to tell you every month. They tell you your direct debit will be £xx and that’s how it will be every month. If they are going to change it to £yy then they have to tell you 14 days before.

2 Likes
26

Not all of them. I know British gas are doing that, but EoN Next aren’t. They’ve suspended my direct debit for six months because of the government grant, so I’m not paying anything, and I don’t get a refund.

1 Like
27

You agree with the organisation (e.g. your electricity provider) that they can set up a Direct Debit. Monzo know nothing about that at this stage so can’t tell you about it or ask “are you sure”. They don’t need to ask if you’re sure. You’re making the agreement with the electricity company. They have to give you the text of the Direct Debit Guarantee, and you have to agree that you’re happy for them to set up the DD.

They then have to tell Monzo. They do this by sending the details you provided through the BACS system as an electronic message. This takes 2 working days from the time the send the instruction, and they don’t necessarily send it the same day you agree to the Direct Debit.

Some organisations send new DD instructions each working day, some do it once a week, some once a month. So Monzo can’t alert you to the DD being set up until they receive the instruction from the organisation you have authorised to do so.

The notification you see from Monzo is simply a confirmation that the instruction has been set up, so you know your wishes have been carried out. It isn’t intended to be an “are you sure”, but it would alert you if someone else had set up a DD fraudulently. Monzo is ahead of the game here because traditional banks don’t tend to give an alert for a new DD setup.

Likewise, the DD set-up instruction contains no information about how much the payments will be that you have agreed to. Monzo don’t know how much will be taken until each payment instruction is received, again via the BACS system. Again, Monzo are ahead of the game here compared to traditional banks because they will tell you in advance how much the payment will be.

Edit: BACS has been around since the late 1960s and for something so old it’s pretty impressive that it works as well as it does. wearepay.uk now owns BACS, Faster Payments, and the image clearing system (but not CHAPS). They have a programme called New Payments Architecture which will eventually provide a single unified clearing system using new technology and providing much more feature-rich and data-rich payment options. However, replacing something like that which requires all the banks, merchants, service providers to completely rejig their technology can’t be done overnight.

6 Likes
28

I understand that’s the theory, but of course the ‘agreement’ little me made with big energy company wasn’t exactly made with terms that I suggested. One of my next projects will be try another company to see if this experience is unique to SSE, but it’s a really frustrating experience. They ask to setup the DD online, but cannot tell me what the amount will be at the moment of setting up, they also cannot even tell me straight anywhere what the actual rates for electricity/gas are, just some vague, “probably 2K a year or so…” - and “Direct debit is cheaper”, but how much and why… nothing… So yeah - Me phoning up and saying can you stop messing around with my bank account, and the girl on the phone is gonna be like “oh yea, let me just add that to your contract, no problem” … somehow I’m not seeing it.

I know this is off topic but really

I login to my Ukrainian energy company site, and it’s just there - 1.68 UAH/KWh - last month you used 898KWh, so your billing is 1,508.64 - easy - I have no idea how much I’m paying SSE.

29

But this really is the crux of the problem isn’t it - they made this system in the 60s, and have just been sat on it and taking our money since then. And everyone is okay with this.

When you pay with a card online, you can an instant notification, “you are trying to spend 100£ on amazon, confirm it” - there is security and knowledge of what’s going on. There is nothing stopping Direct Debit having this sort of thing except complacency by big banks.I know this wasn’t always the case, but we changed because we realised it was so insecure.

I know this supposedly the case, but I don’t see what’s stopping someone making a website, SSEEE.com, showing you a DD agreement, taking your account number and taking all the money I want from you.

30

This sounds like an issue with SSE.

The energy company will predict your usage over the year and will then divide that by 12 to charge you a fixed amount each month. If you exceed your predicted usage (or use less) then it can change, but you can request to keep it the same. You do however run the risk of going into arrears.

3 Likes
31

Yes because it works, if it’s not broken it doesn’t need fixing.

The direct debit scheme covers if anything goes wrong

3 Likes
32

You should get presented with a bill, which will give your usage. We use Direct Debits over here to smooth out the ebbs/flows of charges from Winter to Summer.
You can switch to payment on receipt of bill, but that’s more expensive (usually).

That’s not what Direct Debits are for though. Direct Debits are a guarantee that you’re going to pay the amount, irrelevant of what it is, but the counter of that is that you are guaranteed a refund if you raise a dispute about it.

I would hate to go in and verify every single Direct Debit. I get told 2-3 days before my direct debit is due in Monzo what it is. I also have bills sent to me outlining what the cost will be each month for the Direct Debit. :person_shrugging:

Absolutely nothing - Jeremy Clarkson shared his bank details online, and people set up Direct Debits in his name, he got the money back instantly by claiming against the Direct Debit guarantee.

1 Like
33

I’m sorry but what exactly is the point of this thread? Feels like it should’ve been locked a while ago…

Monzo have no control over how direct debits work. And you can use them or not. No amount of whatiffery is going to change how things work however.

5 Likes
34

BACS have strict rules about who can take DDs. Lots of regulatory hoops to jump through.

It does indeed boil down to that.

2 Likes
35

It would be a right ball-ache if you had to do that.

1 Like
36

OP your whole premise that “DDs are inherently insecure and anyone can just take what they want from my account” is incorrect. You’re starting your arguments for change from a point which doesn’t exist.

Millions of people use dozens of DDs each, and funnily enough, the financial news isn’t clogged up with people complaining about fraud. Fraud can’t happen. When a mistake is made, your bank will guarantee your loss. Financial services in the UK are one of the most heavily–regulated areas of your entire life, in your favour.

So, use DDs, or don’t. But you won’t change the system, because it’s one of the most effective interoperability payment tools in the UK. And what you’re asking Monzo to do is a) unnecessary, and b) impossible anyway.

8 Likes
37

Maybe you are right, my premiss is wrong, and it’s more of a feeling. I think I have two main points, and maybe you are right, its not something Monzo can solve by themselves, but something they need to lobby the industry for improvements to

My main issues

On security - maybe it is all completely secure, and you can always get your money back, etc, but it feels really insecure - words on a website from my energy company about some “guarantee” feel meaningless - we have all spent hours on the phone trying to get straight answers out of companies, and if something goes wrong, sure, you can get your money back, but your probably gonna waste days of your life trying to sort it out.

How annoying for him to have to do that, when a simple security check on setup would have prevent it

–

On Control - this is probably the bigger issue

  • some of this is the slowness of the system - this is surely an easy fix - we have instant payments - why can we not instantly setup DD
  • a lot seems to be the companies I’ve had to use - but those I’ve used have been unable to say, until after I setup the DD what the amounts would be - that’s probably the crux of it - “give us your details, and we’ll tell you before we take the money what its gonna be” - I know that’s not Monzos fault - but it is something the DD system could require to be solved.

I thinks like this

Sure - but that’s only after the fact - until I get a bill, there is nowhere on the website, or even when I phoned they were unable to say what the £/KWh rate would be.

Another one, I moved into the house, Southern Water, took about £50 a month, for 3 months, and then, refunded about £100 and changed the DD to £20 a month - what the heck is going on there?

And this - I agree - but the first time - when I’m not sure - or a setting, because I don’t know I’ll have enough money in the account on that exact day, and it might have to wait a few days

The point is that I was really unsure able using DD before, because its so unclear what’s going to happen, and having used it, I still feel like I have no idea what’s gonna happen each month, I just have to trust that these companies are adding up right, which they have done little to gain that trust.

I know all of that a lot is not the bank itself, but it is part of the system of Direct Debit, that the bank is apart of setting the rules of.

38

It’s secure case closed

It’s literally one of the safest and easy ways of paying bills in this country. The provider already tells you what your spend will be, if your electricity company isn’t doing that, then that’s on them. It’s nothing to do with the DD scheme one bit.

5 Likes
39

I’m really sorry and I mean this with the upmost
respect but Monzo don’t, and shouldn’t, need to lobby the industry to change how direct debits at all.

They should Input and provide recommendations but this system works just fine for many people.

I’m sorry you’ve had such a bad experience but I can’t imagine anything will change so you will have to accept them as they are, or use an alternative method.

4 Likes