Cancelling direct debit authorities

If you have entered into a direct debit authority with a financial service provider and wish to cancel the authority, you should be aware that different rules apply depending on the type of account.

You should remember, however, that cancelling the direct debit authority may be in breach of your contract, so you should check your contract and seek professional advice. Further, it may not relieve you of your obligations under your contract with your service provider.

Direct Debits from a statement account

If you have given a third party an authority to debit your account, that authority may be cancelled either by notice to the third party and/or by notice to the bank. This is reflected in clause 19 of the New Code of Banking Practice, which says that a bank will promptly process your instruction to cancel a direct debit request and will not direct or suggest that you should first raise any such request directly with the third party. The bank may suggest that you also contact the party and this is a prudent course to take to ensure that the authority is cancelled.

Even if your bank has not signed up to the new Code of Banking Practice, this office is of the view that the procedure contained in clause 19 represents good banking practice. For further information on cancelling direct debits from statement accounts, please see our Bulletins 24 and 29

Direct Debits and credit card accounts

The position with credit card accounts is different and whether you can cancel them directly with your bank will depend on the terms and conditions of your credit card contract. You should refer at first instance to your credit card terms and conditions.

If you want to cancel your credit card periodical direct debit authority and this is permitted under your terms and conditions, this office takes the view that you should take the following steps:

1. Write to your bank and the merchant cancelling your authority to debit your credit card account
2. When you receive your next credit card statement, read it carefully. If the transaction has been debited to your account, contact your bank straight away and dispute the transaction. As various card schemes have time limits on processing charge backs, you should not wait to dispute the transaction
3. The bank will then start the charge back process if it is available to you
4. Remember to check subsequent statements as well and dispute further transactions should they appear on your later statements.