By: Nghiinomenwa Erastus
A customer has no power to go to the bank and terminate a debit order on their own, the Bankers Association of Namibia revealed.
An unwanted debit order can only be terminated by/through the deducting company or third party.
The clarification is in a press release by the Bankers Association of Namibia (BAN), chief executive officer Brian Katjaerua released this week.
A debit order is an agreement between you, the client of the bank, and a third party to take an agreed amount of money from your bank account every month to pay for services or loans.
In the statement, the BAN head urges the public to familiarise themselves with banking products that are available on the market.
“We don’t always understand the full functionality of products, services, and financial instruments such as debit orders,” wrote Katjaerua.
Katjaerua’s explainer came after Namfisa’s first-quarter report revealed that a total of 226 complaints were received from consumers with many of them relating to deductions.
As a result, Namfisa had to intervene and force the non-banking entities to collectively refund and pay consumers N$560 317 in the first quarter of 2021.
“These payments broadly relate to wrongful deductions,” Namfisa report revealed.
Non-banking entities are responsible for many stop orders, as individuals pay their medical, pension, insurance policies-these deductions are facilitated by the commercial banks.
Often stories are told of how one is waiting for debit orders to go off from their salaries at the end of the month before they can enjoy funds left in their bank account.
This is because they are settling their financial obligations/debts.
The Bank of Namibia statistics shows that out of the N$104, 99 billion owed by the private sector, N$61, 2 billion is owed by households by the end of July 2021.
Using the annual 2020 GDP figures, Simonis Storm has revealed that household debt to GDP stands at 46.2% compared to business 32,6%.
“As a consumer of financial products, it is your duty to make sure that you understand the functionality of debit order agreements,” said Katjaerua.
He said misunderstandings over debit order fees and deductions are sometimes caused by a lack of understanding of what the terms and conditions entail.
Debit orders are one of the most commonly used products in banking services, according to BAN- with the advantage of assisting individuals to pay their accounts on time and keeping track of all.
Debit orders also reduce the need for one to physically go to the bank to pay for the services or spend time paying many bills via internet banking.
Katjaerua added that in Namibia, debit orders are commonly used to pay for mortgage loans (house), personal loans, car loans, insurance premiums, furniture accounts, clothing accounts, and student loans.
He also warns those with debit orders to be aware that if a bank account does not have enough money to honour the agreed amount, then debit order rejection fees will apply.
Moreover, late payment fees and interest will also be added by the third-party with whom the individual/business has debt.
Debit orders will be presented for collection against the client’s account three times during the day.
The unpaid fee charged for unsuccessful debit orders is 1,5 % of the debit order amount, with a minimum of N$39 and a maximum of N$200 as per the Bank of Namibia regulation.
Clients are always advised to ensure that debts payable through debit orders are settled first before spending on their wants. Email: email@example.com