ADDACS, ADDACS reports, Bacs, Direct Debit, penalties
14, JAN 2021

It’s no secret that the Bacs scheme is underpinned by a complex set of rules. These rules are there to maintain the integrity of the system. They keep the system running smoothly, benefiting both Service Users and their customers – so staying compliant has to be a priority. In this post, we focus on ADDACS reports and explain how to use them to keep your Direct Debits in good order and to remain compliant with the Bacs Scheme.

What is ADDACS?

The Automated Direct Debit Amendment and Cancellation Service is the mechanism by which Service Users are informed about any Direct Debit Instructions that have been amended or cancelled. It’s usually known by its acronym: ADDACS.

The Direct Debit Guarantee gives your customers the right to cancel a Direct Debit Instruction (DDI) at any time. They won’t always get in touch with you to do this – they may go direct to their bank. With the popularity and simplicity of online banking, it’s simple and straightforward for a customer to manage their Direct Debits in this way.

Another common scenario is when a customer changes bank using the Current Account Switch Service. If they don’t get in touch with you, the ADDACS report may be the first indication that anything has changed. The ADDACS reason codes included in the report give you vital information about what has happened.

How do I receive ADDACS reports?

You can receive an ADDACS report in either XML or HTML format. Service Users can log in to the Payment Services website via either a smart card or login details, and download the ADDACS reports in their preferred format.

XML Format

If you opt for the XML version of the report, you can download it straight into your Bacs software, which links to payment services. This is usually done with a smart card. Alternatively, you can download it and then import it into your Bacs software.

Downloading the XML version of your ADDACS report directly into your Bacs software means you receive the information, including the vital ADDACS reason codes, in a consolidated and consistent way. This avoids errors that can all too easily arise from manual input. You also avoid the administrative costs of manually inputting the data or printing reports.

HTML Format

The HTML version is easy for you to view – but remember that you will need to input the information manually into your Bacs software to update your records.

What are the benefits of actioning my ADDACs reports?

One of the key benefits of accessing and actioning your ADDACS reports regularly is that by keeping your customer records up to date, you will reduce the number of failed transactions. You can also improve your customer service by adapting your system to generate standard letters relating to the different ADDACS reason codes that appear in the reports. This will help you maintain your customer information more effectively.

If you choose to use a Direct Debit bureau, such as Clear Direct Debit, they can access your ADDACS reports and make them available to you via a secure channel such as SFTP.

How do ADDACS reports work?

First, your customer advises their bank of a change, then the bank inputs the information. On day two – the day after the bank inputs the information – notification will come to you in your ADDACS report. ADDACS validates every advice, stores the amendments and cancellations, and advises you, the Service User, electronically via the ADDACS report system.

How important is it that I action this information?

From a compliance perspective, it’s vital that you act on the information in the ADDACS report within 3 working days. You need to log in to the system regularly to make sure you are up to date and can act promptly to stay compliant.

What are the penalties for failing to respond to my ADDACS reports?

As a Service User, one of the key risks comes from being non-compliant with the Bacs Scheme rules. As we’ve mentioned, you need to action the information in your ADDACS reports within 3 working days. Failing to do so means you are not complying.

In addition, if you do not keep on top of the up-to-date information about your Direct Debits, you risk an increase in the number that is returned unpaid and could experience increased indemnity claims. Bacs will follow up with Service Users that repeatedly fail to action their ADDACS reports – we know of one organisation where this has happened. Ultimately, you might be asked to leave the Bacs Scheme.

The real penalty, though, is the time and administrative effort you will need to put in to reconciling your systems and chasing customer non-payments without knowing the reason for them. This can be a big hit for any organisation and can impact negatively on customer service.

What else can I do?

Are you confident you and your team fully understand Direct Debits and the Bacs Scheme rules when it comes to ADDACS reports and ADDACS reason codes? If not, or if you think people would benefit from a refresher, get in touch. We are a Bacs Accredited Training Provider and can offer Bacs Direct Debit training tailored to suit your needs.