FOS orders TD Direct to compensate over failed Isa direct debit


TD Direct Investing must compensate a customer after a failed monthly direct debit resulted in her stocks and shares Isa having less units than it should have.

The Financial Ombudsman Service decided the business was at fault for the direct debit failing and ordered it to put the customer’s account back in the position it would have been in if the direct debit had gone through at the right time as well as paying £50 compensation.

The customer, Ms G, instructed TD Direct Investing to set up a monthly direct debit in March 2016 for a £1,000 purchase of units in her investment Isa. However, this did not happen and was not discovered by Ms G until July 2016.

The business originally said the direct debit did not work because she had not set up an Isa for that year. However, the business later said that was incorrect.

Ms G complained and then re-set up the direct debit, increasing her contributions for three months to make up for the missed payments. Her complaint said she received fewer units than if they had been purchased when the direct debit was meant to be set up.

TD Direct Investing said Ms G should have realised there was a problem much sooner than she did. It also said she should have acted sooner and invested £4,000 in July 2016 to make up for the missed direct debits.

Compensating for inconvenience

Ms G was offered £25 in compensation for the inconvenience caused by the incorrect information it had given and £25 for the direct debit failing.

A FOS adjudicator initially upheld the complaint but TD Direct Investing did not agree with the decision.

It said Ms G was responsible for monitoring the account under the terms and conditions and she had plenty of opportunities to notify the business of the failed direct debit before she did.

It also said it did not believe Ms G’s decision to increase her direct debit to £2,000 was to mitigate her losses but to ensure she used her Isa allowance by the end of the year.

In the decision, ombudsman Julia Chittenden says Ms G’s actions were reasonable in both monitoring her account and in deciding to pay more into her Isa to mitigate the loss.

The decision says: “It was reasonable for Ms G to believe that the business had carried out her instructions and that her direct debit had gone though. The whole point of setting up a monthly direct debit is so that you don’t have to keep going into your account to make individual payments.”

It adds: “I also think Ms G did monitor her account when she checked it in July. Having realised there was a problem Ms G did then contact the business promptly to inform the business of the problem.”

The decision goes on to say: “Ms G has now caught up the missed payments by using her full Isa allowance for the year. I note that when the adjudicator looked at the complaint that was not the case so he suggested the business made an additional purchase of units in respect of one missed payment. But, I don’t think that is now necessary because the missed payments have been all caught up.”

“So I consider the business should put Ms G’s account back in the position as if the direct debits had gone through at the right time. If that had happened Ms G would have been able to buy more units and so there would be more units in her investment Isa.”