Can my insurance company keep taking debit card payments?

Q I pay for my car insurance monthly. As far as I was aware, these premiums were being collected by direct debit, but I recently tried to cancel the policy - after asking the insurance company, which twice failed to do so - and consequently tried to stop the payments from my bank. To my horror, I discovered that my 'direct debit' payments were in fact debit card payments, which can only be cancelled by the company taking the money.

I can't find any documentation in which I authorised this; I bought my car insurance online and can't recall anything there, either. At the bottom of the credit agreement, there is a direct debit guarantee, which is why I thought I was paying by direct debit.

I queried how the payments were being taken from my account and was informed that as I paid my deposit online by card, this allowed the insurer to take subsequent normal monthly payments in the same way. Can it do this?



NS

A No, it can't. According to Switch, your insurer was most certainly NOT entitled to take 'many' payments from one authorisation.

"With Switch/Maestro and Solo, every transaction must be authorised - recurring transactions are not allowed by the scheme," says a spokeswoman.

"Direct debits are different from debit card payments; with direct debits you can set up an arrangement with the bank to carry on paying whatever amount is billed, whereas with Switch each single payment must be authorised by the cardholder."

This means your insurer had no right to take regular payments from your card, so it looks like it owes you a proper explanation of why this has happened - as does your bank.

Complain to both institutions in writing, and send the letters by recorded delivery, it only costs 60p or so. Make it plain in your letter that you want a satisfactory solution to this problem or you will take your complaint to the Financial Ombudsman.