Be vigilant: After cancelling a direct debit, check to ensure the bank has complied.

Be vigilant: After cancelling a direct debit, check to ensure the bank has complied. Photo: Nic Walker

 

Exiting a direct debit can be a wrestle, with a new Choice investigation revealing that three out of four banks failed to cancel the arrangements promptly.

Banks that have signed the voluntary Code of Banking Practice undertake to promptly process customers' requests to cancel direct debits from their bank accounts.

However, a shadow shopping exercise by consumer group Choice found that when 16 signatory banks were asked to cancel a direct debit for a mobile-phone service, only four - ANZ, BankSA, Citibank and CBA - handled the request correctly and promptly.

Three banks told the callers they couldn't help, five gave at least one response that wasn't best practice, and another four - Bankwest, Beirut Hellenic Bank (now Bank of Sydney), ING and Suncorp - charged a $10-$15 fee.

AMP and HSBC failed the test, telling the callers to contact the retailer to cancel the direct debit. Other banks had mixed results, with St George telling one caller it would take 15 business days to process the request, and Westpac saying that when cancelled, the direct debit would be blocked for three years.

Choice spokesman Tom Godfrey says the training of customer-service staff needs to improve if banks are going to adhere to their own code of practice in this area.

''What the research shows is most of them don't really have a good understanding of what the code is and how they need to act within it.''

Australian Bankers Association policy director Diane Tate says banks are looking at their compliance with the code as they prepare for the introduction of a new version from February 1, 2014. But the clause relating to direct debits in the new code will remain the same.

''We do know there needs to be improvement in relation to staff training and consumer materials just to explain what direct debits are, how they operate, and how banks can help with setting up those arrangements and cancelling them.''

Mike Slocombe, the chief operating officer of AMP Bank, admits that in the past it has given incorrect information to customers on cancelling direct debits, but adds: ''We acted quickly to rectify this by making our training material clearer and running additional training sessions.''

Godfrey says the industry has had almost a decade to comply with the code and its investigation highlights the fact that self-regulation of the industry is not working. He says consumers cancelling direct debits need to be vigilant about checking their bank statements.

His advice to consumers contacting a bank: ask to speak to a supervisor; mention the Code of Banking Practice; and if they try to charge a fee for cancelling the direct debit, challenge it.