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I have just set up a monthly payment plan for my BT line, to avoid the £4.50 a quarter charge for not having one. I shouldn't have to do this, I have never missed a payment in the past and I think this is a scandal, but that is not why I am writing.
BT have set up the direct debit over the phone. They asked me for my sort code and account number and that was it. No forms to fill in, no signature required to give them authorisation they just did it. I called my bank and asked if this is normal procedure and was told that it is. I appreciate that it is BT an not some cowboy outfit but even so, surely it should not be that easy to set a direct debit up on someones account?
A company needs to go through certain checks in order to be able to claim Direct Debits. Part of the DD scheme is that if a payment is taken in error or fraudulently from your account the bank indemnifies you (it gives you your money back). In fact it has to give you your money back first and then resolve any dispute. So in a nutshell there is not risk to you at all in having a DD set up on your account however its set up.
It is very difficult to set up a Direct Debit drawing account with a bank. As Confab says, if a payment is taken in error or fraudulently then the bank indemnifies the customer so it makes doubly, doubly sure about the bona fides of the drawing client.
option are sponsored by their bank. They're thoroughly checked for integrity,financial standing and administrative efficiency before being allowed to offer Direct Debit payments to their customers. Once they're approved they can set up Direct Debits over the phone, in the manner you describe.
Bear in mind that if anything goes wrong with a Direct Debit payment it's your bank that is responsible for repaying you, not the company to whom you're paying the money, even if it's their fault.
With regards to BT, my quarterly account has been via Direct Debit for some time now. No problems whatsoever, the bill arrives days before the amount is taken from my bank account. If there is a discrepancy it can soon be resolved before the amount is actually taken.
Not like some firms such as Gas/Electricity, who will take a set figure, no matter how much has been used. They are always seem ahead of the game in having more of your money in their bank than owed.
I once had an erroneous utility bill for £2,000.
If I paid by direct debit I would have been about £1800 overdrawn.
While I'm quite willing to accept that I would have been reimbursed, I would have had a couple of very embarassing days at supermarket checkouts, petrol stations and cash machines.
Fixed sums at fixed times - yes. Them taking what they want, when they want - no!
Remember there is a difference between a monthly payment account (which PaleoBill has set up) and paying your quarterly bill by DD.
Monthly payment plans take an amount which approximates to one twelfth of your annual usage for that particular utility and in the cases of gas and electricity, due to seasonal variations in usage, the accounts will sometimes be in credit (summer) or debit (winter). If the sum is wildly out then an adjustment is made.
Paying a quarterly bill which is grossly over-large will produce some alarm bells at your bank and they should inform you of the discrepancy before putting your account into huge deficit. If this happens and they don't inform you, change your bank - there are plenty to choose from.
Thanks guys. I am a little happier now, but not a lot :-)
The monthly payments of approx one twelth of your annual bill are far better going into an Isa, and coming out again when you get a bill.
That way you, and not the utility, get the tax free interest!
The ISA would have to be raided four times a year to cope with the usual quarterly utility bills.
I would be only too pleased to pay all my bills once a year, in arrears but, the world doesn't work like that.
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