Council backbills for years after failing to collect Direct Debits through its error

[SGoodman]

A person joined a Council run leisure facility membership scheme. An initial payment was taken by Credit Card and subsequent monthly payments were supposed to be taken using the valid Direct Debit mandate that the Council was provided with. An electronic membership card was issued and this had to be presented and checked each time a leisure facility was used. Membership Cards were supposed to be cancelled in the event of non-payment.

All seemed fine but after three years the Council back billed for three years membership because it had not taken any DD payments. The mandate had not been lost, the problem affected around 1% of leisure memberships. The Council has also had other DD issues affecting literally thousands of its DD users. The Council are willing to accept payment of the invoice in installments but do not appear willing to cancel or reduce the invoice amount.

In my, layman's, view the Council do not have any contractual basis for issuing the invoice - is that correct?
Are there any Consumer Rights points to allow payment of the invoice to be avoided?

I hold the above view because there was no agreement to retrospectively pay for a lengthy membership period via an invoice. The Council breached the original agreement by failing to take payment in the agreed way and by failing to cancel the cards promptly. Invoicing in this way is fundamentally different to the agreement that was entered into.

Also in some ways the Council did not actually suffer a loss. Thorough its own fault the Council failed to collect revenue but the cost of providing leisure facilities, such as a swimming pool, remained the same whether or not the person with the card made use of the facilities.

A twist in this is that the Direct Debit guarantee is that DD payments will be for the correct amount and taken at the correct time. In this case though the DD was never used so the guarantee does not seem to apply although a mandate was completed.

[echat11]

Hi SGOODMAN

Welcome to LB

There will be Terms and Conditions attached to the Council run scheme. In saying that, those Terms and Conditions maybe 'unfair'.

Check the 'T and C's', then if you can't resolve it with the Council, then speak to your 'Local Councillor'.

I sense that you're happy to pay, but you want the Councillors failure to be reflected in what you pay.

Scroll down, Leicester City Council (chosen at random)

https://www.leicester.gov.uk/leisure...er/membership/

[SGoodman]

Hi SGOODMAN

Welcome to LB

There will be Terms and Conditions attached to the Council run scheme. In saying that, those Terms and Conditions maybe 'unfair'.

Check the 'T and C's', then if you can't resolve it with the Council, then speak to your 'Local Councillor'.

I sense that you're happy to pay, but you want the Councillors failure to be reflected in what you pay.

Scroll down, Leicester City Council (chosen at random)

https://www.leicester.gov.uk/leisure...er/membership/

I am helping somebody out and they are absolutely not happy to pay as even paying it in installments would be a problem.

If this had been a simple error such as the mandate being lost and if the problem had been found fairly quickly that would have been fine. This though is a serious system failure that went undetected for years.

The T&Cs are minimal here are the relevant terms:

1. The cardholder must report to reception and show their card on every visit prior to participating in any activity otherwise the full price may be charged.
2. Cards are not transferable and any use other than by the Cardholder will result in immediate cancellation of the card with no refund.
3. The 'primary' applicant for membership is solely responsible for his/her payment and any family members linked to the application. In the event of non-payment all linked cards will be cancelled.

The two payment methods are:
16. Single annual payment by cash, cheque, credit or debit card.
17. By monthly direct debit with a minimum of one month after the first initial cash payment.

There are no terms that allow the Council to retrospectively bill for 3 years. My view is that the invoice should be contested in full. It was the Council that did not follow the agreement, that is their loss.

[echat11]

All Councils have a Complaints procedure (it will be on their website), the procedure gives the Council 3 months to look into the Complaint. Once they comeback to your friend and if their still not happy, they can lodge a Complaint with the Local Government Ombudsman (LGO).

https://www.lgo.org.uk/decisions/oth...re-and-culture

I thought they were happy to pay because you've written the following:

'The Council are willing to accept payment of the invoice in installments but do not appear willing to cancel or reduce the invoice amount.'

[SGoodman]

All Councils have a Complaints procedure (it will be on their website), the procedure gives the Council 3 months to look into the Complaint. Once they comeback to your friend and if their still not happy, they can lodge a Complaint with the Local Government Ombudsman (LGO).

https://www.lgo.org.uk/decisions/oth...re-and-culture

I thought they were happy to pay because you've written the following:

'The Council are willing to accept payment of the invoice in installments but do not appear willing to cancel or reduce the invoice amount.'

It was to be expected that the Council would initially try to get full repayment. However we did think that a refusal to do that would result in some negotiation as the problem is entirely the Council's fault. If the Council really tries to get full payment then they will have to accept a repayment period of at least 3 years and a period of 6, 9 or more years is not unrealistic.

We are going to follow the Council complaints procedure but since this is a disputed invoice involving Direct Debits and where one payment was taken by Credit Card if the complaints process does not resolve things we were thinking that the Financial Services Ombudsman and the Council's 'sponsoring service provider' for use of the Direct Debit system might be the next step rather than the Local Government Ombudsman.

The reason for contacting this forum was really to try and find out if there is any Consumer Protection legislation angles to this than should be stressed during the Council's complaints process.

Since the T&Cs of membership specified monthly charging by DD what contractual/legal basis does the Council have to support issuing a three year retrospective invoice?

[echat11]

It was to be expected that the Council would initially try to get full repayment. However we did think that a refusal to do that would result in some negotiation as the problem is entirely the Council's fault. If the Council really tries to get full payment then they will have to accept a repayment period of at least 3 years and a period of 6, 9 or more years is not unrealistic.

We are going to follow the Council complaints procedure but since this is a disputed invoice involving Direct Debits and where one payment was taken by Credit Card if the complaints process does not resolve things we were thinking that the Financial Services Ombudsman and the Council's 'sponsoring service provider' for use of the Direct Debit system might be the next step rather than the Local Government Ombudsman.

The reason for contacting this forum was really to try and find out if there is any Consumer Protection legislation angles to this than should be stressed during the Council's complaints process.

Since the T&Cs of membership specified monthly charging by DD what contractual/legal basis does the Council have to support issuing a three year retrospective invoice?

You could argue that their 'Terms and Conditions' are 'unfair', as they do not state what would happen if payments are missed. What would happen if the Council fails to collect payments through no fault of the member (who has supplied the correct details) and also no mention of 'back billing if there has been a failure to collect payments.

They can't make up Terms and Conditions on the 'Hoof', the members need to know before they take up 'membership' what the consequences of 'Direct Debit' failure is.