Mortgage brokers were left confused after an error saw Barclays tell one broker it could not accept monthly mortgage direct debit payments from Monzo and other online banks.
Mortgage broker Jamie Lennox of Dimora Mortgages was alerted to the issue last week (March 8) when the lender’s online system was unable to accept a sort code from a Monzo bank account.
Lennox raised the issue with a member of staff at Barclays via its webchat function and was told the bank does not accept direct debit from Monzo bank “as it is an online bank”.
Lennox was told he would need to “check with the client for a different bank”.
When the broker informed the staff member that Monzo is the only current account held by the client, he was told: “I do apologize as per the policy, we do not accept online banks for direct debits.”
“From a company that claims to champion innovation as part of its core values, you have to laugh,” Lennox said.
“Given online banks have the exact same facilities such as direct debit payments, there are zero logical reasons why Barclays shouldn't be accepting their accounts for direct debits.
“As consumers increasingly move their banking to fintech firms such as Monzo, and with many of the big six closing countless branches at the same time, you do have to wonder how many customers they will lose.”
He added: “Things like this put unnecessary barriers in front of customers and aren't really in the spirit of treating customers fairly.”
However a spokesperson for Barclays told FTAdviser that it does accept direct debits from online banks.
They said: "This is a rare instance of a sort code being allocated that hadn’t yet been uploaded to our system.
"This prevented us from being able to verify and process the mandate instruction successfully.
"We apologise to both the broker and their customer for the confusion and inconvenience caused, and are taking steps to resolve the issue."
Despite this clarification from the bank, the issue was not immediately resolved for the client in question and agents on Barclays' webchat function still maintained that it was the bank's policy not to accept direct debits from Monzo or other online banks.
Speaking to a different webchat agent, Lennox was told the following day that he did not have the right information from the bank and that "as per policy Monzo Bank is not acceptable for direct debit."
Rosehill Financial Services managing director, Samuel Ewen said the situation was confusing and that the policy seems to be inconsistent.
“My mortgage is with Barclays and my direct debit is taken from my Starling Bank account, so it's certainly not all online banks,” he said.
“Not allowing a direct debit from online banks is a strange requirement to have, particularly where we're seeing many more clients with Monzo and other online bank accounts,” Ewen added.
