FEATURE: Bills, bills, bills
Direct Debits may have made it easier to organise your finances, but there is still a risk of incorrect billing. Barney McCarthy reports
It is easy to take Direct Debit for granted. Three quarters of Brits have at least one Direct Debit commitment and most of us have many more. Mobile phone bills, utility expenses, gym memberships and Council Tax are just some of the outgoings that the payment method can take care of with the minimum of hassle, with no need for any involvement on your part once the debit has been set up. BACS, the industry body responsible for Direct Debit calculates that by using the service rather than writing cheques, consumers can save seven hours and more than £200 per year.
Michael Chambers, managing director of BACS, says: “Over the past 40 years, BACS has processed more than 68 billion payments on behalf of UK consumers and businesses. In 2007 alone, we were responsible for processing more than 5.5 billion payments; that’s an average of 90 payments for every man, woman and child in the UK.”
But while such convenience may be a godsend in today’s hectic climate, it could also mean that any mistakes go unnoticed. Since itemised statements are available from most banks it shouldn’t be the case, but many incorrect payments slip through the net – sometimes for months on end. Comparison website Moneysupermarket’s research reveals that over eight million Brits have received an incorrect bill in the last three months alone, with a third being affected over the last 12 months.
Rob Barnes, head of broadband and mobiles for Moneysupermarket, says: “Worryingly, there are millions of people who still don’t check their bills, meaning they could be paying over the odds for a service they have never received. If you don’t check all your bills you are leaving yourself open to being taken advantage of.”
The research also showed Direct Debit is the most popular way to pay gas (48%), mobile (34%), landline (63%), electricity (54%) and credit card (25%) bills. With millions of unchecked and incorrect invoices landing in people’s letterboxes, the comparison site says consumers could be throwing away hundreds of pounds as payments are made automatically without question.
Barnes claims the problems lie with suppliers, more than the Direct Debit service and says consumers could be missing out if they don’t use it. “Anyone who doesn’t pay by Direct Debit should check whether they would be hit with extra charges as some suppliers, such as BT and Virgin, charge for not paying by Direct Debit.”
BACS offers consumer protection by way of the Direct Debit Guarantee. It states that if an error is made by a company or your bank or building society, you are guaranteed a full and immediate refund. The scheme also promises that if the amounts to be paid or the payment dates change, the organisation collecting the payment will notify you, normally 10 working days in advance of your account being debited (or as otherwise agreed). Perhaps the most important tenet of the guarantee is that you can cancel a Direct Debit at any time by contacting your bank. It is worth bearing in mind that doing this without consulting the organisation concerned could jeopardise your credit record, so consult your contract first.
Considering the level of billing inaccuracy in the UK and in light of the ongoing Office of Fair Trading bank charges case, it may be worth paying more attention to what drops onto your doormat. Rather than blindly accepting requests for more money or unopened receipts of payments already taken from your account in a pile on your hall table, it may be time to start claiming some back.