Bank Refund Request
If a payer complains that a Direct Debit has been taken in error and that error is found to have been made by their paying bank, the payer is entitled to an immediate refund from the bank. The paying bank cannot raise an indemnity claim if it was their error that led to the payers account being incorrectly debited. If however, there is cause, the paying bank may raise a Refund Request with the service user.
The payer will already have received a refund and therefore a Service User shouldn’t settle directly with them as the payer could be paid twice.
The Service user can:
Refuse to settle the request
Settle part of the request (for example by deducting an administration fee for returning the funds)
Settle the whole amount.
Paying banks are not permitted to raise an indemnity claim if an identical Refund Request has previously been refused by the Service User. In this instance the service user should raise the issue with their sponsor bank.