Valid Counter Claims
On occasions, Indemnity Claims are raised incorrectly. As a result the Scheme has developed two options for service users:
1. The challenge process – this is an option for a limited amount of time.
2. An appeals process, called ‘the Counter Claims process’.
Where a service user believes a paying bank has made an error in the submission of an indemnity claim, they are able to raise a ‘challenge’ before settlement occurs. This is only available in the following circumstances:
- Where the indemnity has been directed to the wrong service user
- Where the indemnity has been submitted more than once
- Where the collection / core reference has not been included or is incorrect
- Where the amount of the claim is not the same value as the payment collected
If a service user wishes to challenge the indemnity before settlement, they must do so no later than 9 working days after the indemnity claim has been raised.
Valid Counter Claims:
Counter Claims are not permissible where the payer has signed up using a paperless method and disputes having given authority. There is no paper DDI and so the service user cannot prove that authority has been given. The scheme can only accept a signed and dated copy of a DDI as proof of a payers authority. Services users however, do not forgo their rights to using other supplementary evidence, such as call recordings, to challege settled claims. But this must take place outside of the direct debit scheme rules i.e. legally through the courts.
The direct debit scheme allows for six instances where the service user can raise a valid counter claim.
Note: This can only be raised after the indemnity claim has been settled by the service user. Failure to settle the indemnity means that the service user cannot raise a counter claim. The six instances are where a service user can counter claim which include the payer’s bank making an error or the payer disputing that they gave their authority for a direct debit but the service user can produce a valid DDI.
Counter Claim Process:
If a counter claim is raised, it must be:
- After the indemnity has been settled
- Within 14 days of settlement of the indemnity
- Lodged with the service users sponsor bank, (usually via the Customer Services Department) and contain the following details
- Date of indemnity claim
- Service user details
- Service User Number
- Collection reference number
Within 30 days, the sponsor bank will validate and progress the claim with the paying bank. The paying bank will provide evidence against the counter claim or settle within 90 days of receipt.
Note: The counter claim is not the only route open to the service user. The service user can pursue the payer directly if a contract is in place and monies are owed – Direct Debit is purely a method of payment and does not affect the underlying contract between the service user and customer.
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