UK: New laws 'needed to protect direct debit customers'

New safeguards must be put in place to protect customers paying by direct debit, a consumer watchdog said today.

The Trading Standards Institute has said it is concerned that consumers are not sufficiently protected by the Direct Debit Guarantee.

It says new legislation is needed to ensure banks, who are responsible for paying out direct debits and the companies receiving payments, rectify mistakes quickly.

Tony Northcott, of the Trading Standards Institute, said: “The government needs to step in and create legislation that will safeguard consumers, should payments go wrong.

“With more and more companies demanding payments this way, there has to be something put in place to stop people battling these big companies on their own.

“There’s a need to get their stall in order before demanding payments in this way, as it would appear the system is not infallible.”

Mr Northcott added any customer who is out of pocket because of a mistake should be reimbursed for any losses, with the company responsible paying back any interest made on the payment, plus compensation.