Changes to Bacs Direct Debit Rules: Are you up to date?

Bacs issued a new version of the Direct Debit Rules in December 2018 (Version 5.2). These new Direct Debit Rules will take affect from this month. As a Direct Debit Service user, you have a responsibility to comply with the Direct Debit Rules. Are you?

The key changes in this version of the Direct Debit Rules are as follows:

1. When a Direct Debit File has been submitted to Bacs in error and cannot be extracted, a same day refund e.g. USING FPS¹ or CHAPS² should be considered.

What does this mean?

If a service user submits a Direct Debit file in error to Bacs, the first port of call is to always contact the sponsoring bank to try and stop the file being processed. This could happen for example if a file is submitted early or if it is a duplicate file. If the file has already been processed by Bacs then it may not be possible to extract it.  This Direct Debit rule now highlights that you should consider giving a same day refund using CHAPS or Faster Payments in the first instance.

This benefits your customers as it means that you can refund the money collected on the same day and they will not therefore be out of pocket  – or possibly incur bank charges.  In turn they have a better customer service experience and it reduces the chances of indemnity claims (which can be administratively time consuming to deal with).  Issuing a same day refund can relieve some of the burden on staff attempting to contact customers / deal with incoming queries and demonstrates to customers that although an error occurred you have quickly taken steps to redress this.

If you do follow this new Direct Debit rule, our advice is to make it as obvious as possible what money is being refunded.  One way to do this is to use the same reference number when you send the refunded payment. Good practice in this situation would be to also make sure that your staff are fully briefed on how to explain the situation to customers who may contact you – and that they know how to reassure them that it wont happen again!  Training on how to set-up and manage an efficient Direct Debit scheme can help prevent these issues from occuring – and can best advise how to deal with situations like this when they do, unfortunately, arise.  You can find more details about Bacs Accredited Direct Debit training options on our website.

2. AUDDIS service users may accept a scanned copy of a Direct Debit Instruction (DDI) from their payer.

What does this mean?

Users of the Automated Direct Debit Instruction Service (AUDDIS), can now accept scanned versions of the Direct Debit instruction (DDI) and no longer need to receive the original signed paper version before lodging the authority. Note: before the DDI is scanned it must be signed with a wet signature and not be an e-signature or just typing their name on the form.

In the past waiting for the paper DDI to be returned could cause delays and slow down the sign-up process. This Direct Debit rule will help you to save time and make it a lot easier to sign up your payers on to Direct Debit. This will also improve the customer service experience and could even save money as there may no longer be a need to pay for postage.

A few points to remember:

• If you store a scanned copy of a DDI, it should be of a size and clarity as to ensure that the essential features of the DDI are clearly visible and legible. This includes but is not limited to the customer’s signature.
• Signed Instructions you receive from your customers may not necessarily include the Direct Debit reference, so it is worth adding this before you save the final scanned version. If you ever need to produce a copy of the DDI (e.g. if there is an indemnity claim challenge etc), the copy you provide will need to have the reference number on it.

If you are a Non Auddis service user and you post the signed Direct Debit Instructions to the bank,  then this Direct Debit rule does not apply to you. You will need to continue to send the original DDI to the bank via the post.  Introducing AUDDIS can often numerous benefits – for example, it is quicker to set-up, you are not reliant on the postage system and if a DDI cannot be lodged you will be advised of this via an AUDDIS report. If you are still using the Non Auddis method and need some assistance with making the move to Auddis we can help – please contact us for more information or see further details about moving to AUDDIS on our website.

3. Other changes

The Direct Debit Rules contain some other updates.  These include:

– Telephone contact details or an email address may be provided within the Paperless Direct Debit confirmation letter. Previously you would have needed both.
– Clarity has been added on what action a service user should take on receipt of an ADDACS (Automated Direct Debit Amendments and Cancellation Service) reason code 3 advice. Contact us if you require further details about this but remember – AUDDIS service users, if you receive an ADDACS report with reason code 3 – you need to send a new 0N instruction to the new bank account details if you have them – you shouldn’t send a 0C to the old account however!
– Terminology changes have been made throughout the Guide.  These are as follows:
– The term “Paying Payment Service Provider (PSP)” has replaced Paying bank
– The term “Sponsoring Payment service provider (PSP)” has replaced Sponsoring bank
– Note: Although this terminology has changed, it is only within the Direct Debit Rules – your payers will still see the terms “Bank/building society” on the Direct Debit Instruction and in the Direct Debit Guarantee.

Do you still have unanswered questions?

The Direct Debit Rules can be daunting – and difficult to absorb without help. If you have questions, please do get in touch with our team who are always happy to help. Call us on 0845 658 6488 or email us on info@cleardirectdebit.co.uk.  Alternatively check out more information on our website.

1. Faster Payments
2. Clearing House Automated Payment System