The Fair Direct Debit Mandate Form
The wording of the Direct Debit Mandate Form currently utilised by the banks is deliberately designed, in my view, to give rise to situations in which the banks can impose penalty charges by authorising the banks to make direct debit payments even if the customer has insufficient funds in his account to do so.
To assist consumers to overcome this problem I have produced my own version of the Direct Debit Mandate Form which makes it clear that direct debit payments are only authorised if the customer has sufficient funds in his account to make the payment at the time of each request.
The Fair Banking Version of the Direct Debit Mandate Form can be downloaded here:
www.stevewhiting.co.uk/documents/fairdirectdebitmandate.pdf
How the Fair Direct Debit should work:
By replacing all of your existing direct debits with debits authorised under the Fair Banking version, then, in accordance with the instructions contained in the form, your bank will only have authority to make a requested payment if you have enough money in your account to do so.
Furthermore if your bank makes a payment when you do not have sufficient funds in your account, then your bank will (i) be liable to make a refund, having made a payment which you had not actually authorised and (ii) will be unable to impose any penalty charge under it's own terms and conditions resulting from an "unauthorised overdraft". Likewise, if the bank decides not to make the payment requested under the direct debit, then it will still be unable to charge an "unpaid item" fee (as not paying the "item" in question was your actual instruction to the bank).
Additionally, even under the banks' new terms and conditions which allow them, in such circumstances, to now charge a fee for "considering" whether to grant the customer an immediate overdraft to allow the payment to be made, the customer's bank will still be unable to apply such a charge because the bank, quite simply, cannot claim to be entitled to "consider" an overdraft for a payment which the customer never intended to be made (if he didn't have sufficient money in his account to do so).
What I would ask individual consumers to do, is to give the Fair direct Debit a try and let me know how you get on with your bank so that I can publish details of those which have accepted the new form here. Additionally, if any particular bank refuses to accept the new form I would encourage you to pursue a complaint through the Banking Ombudsman on the grounds that - you, as the person authorising that debits may be taken from your money in your account, should be able to dictate the terms upon which such debits are authorised (and not the bank) and that it is perfectly reasonable to instruct your bank not to make payments requested under a direct debit if you do not have enough money in your account to do so. This way, once the Ombudsman rules on one solitary case in the consumer's favour, we can publicise the fact and use the single decision to force all banks to accept these "Fair Direct Debits", finally doing-away with the vast majority of personal current account bank charges for good!
As you may, potentially, be the individual consumer who's actions achieve this change for the good of us all, I hope that you will join with me on this issue.
Best wishes.
Steve Whiting.