This article will give you complete information about how to challenge an indemnity claim and what proof is required to challenge an Indemnity claim.
London & Zurich can challenge most Indemnity claims raised by your customers as long as we receive the supporting proof within 6 working days of the indemnity claim email being issued to yourselves.
The sooner we receive the proof and details, the greater the chance of us submitting the challenge to the bank in the allotted time. Once 6 working days are lapsed the indemnity claims cannot be challenged.
Please note if you send us the proof after 12pm of the 6th working day after the DDIC notification email was sent, there is a chance we may not be able to submit the challenge due to not having sufficient time within working hours to challenge.
If an indemnity claim challenge is rejected by the bank you have an option to raise a claim within a small claims court against the payer.
Along with the list or proof required below (these are the ‘must’ we require to be able to make a challenge) if you can provide anything additional such as:
- Email conversations confirming DD set up
- Call recordings of the customer confirming DD to be set up over the phone and providing their information to do so
- Any communication/documentation to support any of the above claims
Please note if you do not provide proof to challenge the indemnity claim the bank may reject your indemnity claim challenge.
Reason codes and proof required to challenge and indemnity claim
1) Reason Code 1 : Details Differ from the Advance Notice
The amount and / or date of the Direct Debit differ from the advance notice issued to a payer by a service user.
To challenge you can produce either:
- A copy of the advance notice, or
- A copy of a contract signed by the payer with details of the amounts to be collected and collection dates.
2) Reason Code 2: No Advance Notice was received
No advance notice was received by a payer.
To challenge you can produce either;- A copy of a contract signed by the payer, which includes the advance notice, and or
- A copy of the Advance Notice you have issued to the customer.
3) Code 3: Bank Cancels The Direct Debit
Direct Debit Instruction (DDI) cancelled by a paying bank. Where there is proof an ADDACS (Automated Direct Debit Amendment and Cancellation Service) Cancellation advice has been sent by a paying bank to a service user on or before the debiting day.
Options for a valid challenge:
Where a paying bank fails to send a cancellation advice to a service user on or before the date the debit was presented against the payer’s account. Or in the case of a paper indemnity claim, a paying bank fails to include the date of cancellation on the form. L&Z will have this information to send the challenge.
4) Code 4: Payer has Cancelled DDI Direct With Service User
Where a payer has cancelled a Direct Debit Instruction (DDI) direct with a service user, even if they have not have cancelled the DDI with the bank.
Please note: This is the only L&Z cannot challenge on your behalf under banking regulations.
5) Code 5: Payer Disputed Having Given Authority
A paying bank may request a copy of the payer’s authority before refunding the payer (applicable to AUDDIS service users), or they may contact the service user for further information, although there is no requirement for them to do so.
Options for a valid challenge:
Applicable to AUDDIS service users – where one or more of the following can be provided by you:
- A valid DD Instruction or establish that one has already been provided and all other requirements complied with.
- Evidence of a contract signed by the payer specifically referencing payment by Direct Debit.
- Evidence of a contract specifically referencing payment by Direct Debit – this need not be signed by the payer where they don’t dispute the existence of the contract, merely the payment method.
6) Code 6: Fraudulent Signature
A signature on a Direct Debit Instruction (DDI) is fraudulent or not in accordance with the account authorised signature(s) held by the paying bank.
Options for a valid challenge:
- We will need a copy of the signed DD mandate by your customer/payer.
7) Code 8: Service User is not Recognised
A payer does not recognise the service user collecting a Direct Debit. Where a paying bank is unable to identify and consequently action a payer’s request to cancel a Direct Debit Instruction (DDI)
Options for a valid challenge:
Applicable to AUDDIS service users – where one or more of the following can be provided:
- A valid Direct Debit Instruction or establish one has already been provided and all other requirements complied with
- Evidence of a contract signed by the payer specifically referencing payment by DD
- Evidence of a contract specifically referencing payment by Direct Debit – this need not be signed by the payer where they don’t dispute the existence of the contract, merely the payment method
You can find more helpful information on Indemnity claims and how to reduce them on BACS Website via this link -> https://www.bacs.co.uk/operating-the-schemes/indemnity-claims/
If you have any further questions please do not hesitate to contact customer.services@landz.co.uk.