Valid Indemnity Claims, how to minimise them and also how to challenge or counter claim.
Firstly, what is an Indemnity claim?
Under the Direct Debit Scheme Rules paying banks and building societies are required to refund the amount of the Direct Debit back to the payer in the event of an error in the collection of the Direct Debit(s). Errors can occur in many different instances and in this article, we will outline some of the main reasons indemnity claims are raised and how they can be avoided both as a service user and a payer.
If you are a payer, and after reading this article you feel that you need to request a refund under the Direct Debit Guarantee, we always recommend that you first speak to the organisation that collected the Direct Debit in the first instance as most issues can be resolved without having to go down this route. They will then be able to advise you on what to do next and potentially arrange a refund if there has been an error with the Direct Debit. Indemnity claims should be the last resort.
For Service Users and Facilities Management clients
Some of the reasons for Indemnity claims
A client might seek a refund from its bank or building society in circumstances where there are issues with the advance notice, there is no valid authority in place including where the wrong customer has been debited. The reason codes used by banks and building societies can be found in the Guide & Rules and on the indemnity claim advice report.
Can I challenge or counterclaim every Indemnity claim?
Interbacs recommends that for each client you legally retain all the relevant information and correspondence to the client that in the event of an indemnity claim being you can provide evidence if the client feels that there has been an error with the Direct Debit.
How to minimise Indemnity claims
Although some claims may be unavoidable and are unable to be challenged, there are ways to minimise the number of claims you receive. Interbacs recommend that you follow these simple steps:
- Always ensure that the customer can contact you easily.
It will only fuel the fire if customers are unable to contact you. We say this so any issues can be discussed and resolved without the need for an indemnity claim to arise. All contact details for the business need to be kept up to date so that customers always have the most accurate details, should they need to contact you. All email addresses and phone lines should be manned at all times during opening hours and contact details on the website should be kept up to date all so that the customer is able to try and get a resolution.
If you have a Direct Debit appearing on your statements that you are unsure of, please see our article about what to do in that situation.
- Have your evidence to hand.
In the event of an indemnity claim that was received incorrectly, and you feel the need to challenge or counterclaim it, then you need to be sure that you have got the correct information ready. The more you can provide the better.
- What evidence do I need?
It is recommend that all correspondence with the client is recorded. So
We always recommend that you try to have the following:
- Evidence of a contract signed by the payer specifically referencing payment by Direct Debit
- Evidence of authorisation if paperless:
- Phone Recordings if signed up over the phone
- Web data if signed up online
- Evidence of a contract specifically referencing payment by Direct Debit – The contract need not be signed if the payer is disputing the payment method and not the existence of the contract.
- Evidence that an advance notice was sent detailing, what will appear on the customer’s bank or building society statement, the date of the Direct Debit, and the payment schedule. Customers that don’t receive an advance notice are more likely to file an indemnity claim.
There are many different forms of evidence that are required for different claim reasons, if you want to try and challenge or counterclaim an indemnity then we recommend that you speak to your account manager, they will be best placed to advise you.
- Be careful not to double refund.
There may be the instance where your business offers a refund and the customer is unsure as to who the money is coming from and then seeks a refund from their bank or building society who in turn raise an indemnity claim. So always make sure that the client is clear that they do not need to do anything if you as a business are offering the refund.
For further information about this article, or even if you would just like some advice from your account managers about what else you can do to minimise Indemnity claims, then please don’t hesitate to contact us.
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