Direct debit cancellations

The Code Compliance Monitoring Committee for the Code of Banking Practice has announced that to test bank obligations in respect of cancellation of direct debit requests it is conducting a shadow shopping exercise, with both telephone calls and branch visits.

Banks are obliged to promptly process a customer instruction to cancel a direct debit request without the need to first raise the request with the service provider.

In addition to this being a customer service issue for the Banks, the Committee noted it is now compounded by increasing hardship where transaction accounts with nil or negative balances are being charged a dishonour fee, for direct debits that the Bank has failed to cancel as instructed.

The Mutual Banking Code of Practice will have a similar provision.

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