Banks Continue to Provide Incorrect Information about Direct Debit Cancellation

Customers continue to be frustrated by bank staff providing incorrect information about cancellation of direct debits, according to two separate reports released by the Banking Code Compliance Monitoring Committee (BCCMC) and the Customer Owned Banking Code Compliance Committee (COBCCC) respectively.

The BCCMC report found that more than half (54%) of bank staff tested gave customers incorrect responses to questions about cancellation of direct debits. The study follows previous research in 2008, in which 80% of staff responses regarding cancellation of direct debits were non-compliant, and 2011, when results improved slightly (66% non-compliance).

The current report was based on a small-scale ‘mystery shopper’ study, conducted in 2017, of 15 bank brands representing 12 banking groups. It found that contact or call centre staff were more likely to offer compliant information than those in bank branches.
Under the Code of Banking Practice, banks cannot direct or suggest that their customers first approach the merchant to cancel direct debits.

Christopher Doogan AM, Independent Chairperson of the BCCMC, said the ability for people to cancel a direct debit via their bank is an important right that gives them control of their finances.

“The Code of Banking Practice recognises and safeguards this right by requiring banks to accept and promptly process a customer’s request to cancel a direct debit,” he said.

He said a bank’s failure to accept or process a cancellation request could be particularly difficult for vulnerable customers on lower or fixed incomes.

The report makes seven recommendations to banks about cancelling direct debits including clear and simple guidance on bank websites, exploring ways to use online banking, and vastly improved communication and training of frontline bank staff.

Similarly, the COBCCC inquiry confirmed that compliance with section D20.1, which states that an institution is required to stop a direct debit arrangement linked to a member’s transaction account upon the member’s request, remains patchy and only a minority of subscribing institutions are achieving best practice standards.

This inquiry follows two previous COBCCC inquiries dealing with the same Code obligation conducted in 2010 and 2012. As a result of the findings, the COBCCC has made six recommendations for improvements to policy and procedures, customer information and compliance monitoring.

Some of the key findings include:

  • Subscribing institutions appear to have a range of procedural approaches to direct debit cancellation in place. While only a minority of institutions measure processing times for direct debit cancellation requests, all stated that these cancellations are processed promptly and typically on the same day.
  • An audit of 17 large institutions’ website information indicated that there are still problems with the written advice provided to customers online. One third of the institutions included in the audit still used wording that was either unclear or, in one case, incorrect and non-compliant. These results suggest no improvement since 2012.
  • Most institutions are lagging behind best practice with regard to the availability and accessibility of online information about direct debit cancellation. Some institutions do not provide such information and, where they do, it is rarely easily discoverable via keyword searches.
  • 52% of institutions have conducted a compliance review using the Committee’s 2012 Compliance Checklist. For most of these institutions, the review was a valuable process that highlighted compliance problems or best practice improvements to be made.


The BCCMC report can be found here.

The COBCCC report can be found here.