Lehmo: Are you caught in direct debit hell? Do you want to get out of direct debit hell?
You go to your bank and they say “No no, it’s not up to us you have to go to the people”, then you go to them and they say “Oh here’s 5,000 forms for you to fill out!”
Jo: Yes, and then you fill them out and somehow it’s still being taken out of your bank and you think, “What do I have to do? This is my money? Don’t be taking my money!”.
Lehmo: Lets go to the Director of Rising Tide Financial Advisors, Chris Browne. Good Morning!
Chris Browne: Good morning!
Lehmo: Chris, this is a nightmare that many people experience. Why is it that I can’t go to my bank, because my bank is holding my money on my behalf? It belongs to me! If I tell them to stop giving it to someone on a monthly basis, why can’t they stop doing that?
Chris Browne: Mate, unfortunately it doesn’t work like that. A direct debit authority is an agreement between the service provider and you. It is effectively telling the bank that you authorize the service provider to deduct an amount from your bank account for the services that they provide. It actually has nothing to do with the bank.
Lehmo: Then can’t I deauthorize it? If I’m the one that authorized the customer can’t I go to the bank and say “Hey, this whole arrangement is off brother, stop it with those payments!”
Chris Browne: Look I’m really disappointed to hear the pain that direct debits are causing because I’m personally not seeing it. First things first, when you set one up you really have to have a good hard look at what you’re signing on to. Have a look at the terms of cancellation so whether or not you need to give them 30 days notice before the service provider is legally obligated to cancel the direct debit. See whether or not there are any “lock in” time frames, so whether you’re locked in for a 12 or 24 month period.
Once you’ve looked at that sort of stuff and you’re comfortable with it, it’s just a matter of ringing the service provider and saying “Hey you know what guys, I no longer want to use you. Here’s my signed authority to cancel the direct debit” If they don’t do it, engage your lawyer because it’s unacceptable!
Jo: But they absolutely exploit the fact that we are one person, were very busy & some of us aren’t particularly good at keeping track of our accounts. Even if we do go to them and say “Please stop this direct debit” and they promise the world and then it doesn’t happen. To enter into that fight, a lot of us feel like were overwhelmed by that.
Chris Browne: It’s a fair call! My mum hates doing this exercise, she absolutely hates it! So I go in and do it on her behalf. If you’re like one of those callers before that had a direct debit to a charity and they made her feel awful about cancelling the direct debit, get a friend or even a professional to call them on your behalf. I can guarantee you, you’ll always get a different response, I never have a problem when I do it on my mum’s behalf.
Lehmo: Your advice then Chris is you have to just be persistent and go directly to the company who are paying the direct debit?
Chris Browne: Absolutely! You just have to find the right department, you have to play by their rules. Find out exactly what form you need to sign if they do in fact have one and send it through. Make sure you keep a record because I have had previous experiences with people coming back and saying “Hey, you know what Lehmo? You never sent it through!”
If you have a registered email and a signed form that has gone through, you can go back and say “Hey guys, I actually did do this. We’re playing by your rules, cancel it. If you have deducted a couple payments since I sent that through, ensure they’re reimbursed” We have 100% success as long as we dot the I’s and cross the T’s.
Jo: Chris just for my own satisfaction can you tell me that yes, some companies deliberately make it difficult?
Chris Browne: My gut feeling is that some do but, the law is the law.
Jo: Well exactly, the law is the law!
Lehmo: I’ll tell you what though Chris, I hate to keep going back to this point but the law makes no sense when the bank has my money and I tell the bank what to do with it and they go “Ah it’s not up to us”.
Chris Browne: Well look it’s frustrating, here’s a couple things you can do. You can simply not set up direct debits! A lot of people set up direct debits for fees and potential discounts that service providers give you as a consequence of getting your bank details, but you can actually just make manual payments. There is a lot of people out there these days that are cynical about the whole system and they’re just saying “Well if I’ve got $1000, just give me a call and I’ll give you my credit card details and we’ll make a simple payment!” Problem solved!
Lehmo: That was certainly the view of Ian in Sunbury who phoned through a bit earlier, where his wife won’t do it anymore! Chris Browne thank you very much, you can catch up with Chris at catchtherisingtide.com.au for further financial advice. That is probably the best advice, just don’t do direct debit!