- Bacs, Direct Credit, Direct Debit, News, Training
- 10, OCT 2019
Changes to Direct Debit Error Recovery
On 30 September 2019, the rules on Direct Debit error recovery changed. Are you aware of what to do if you submit a Direct Debit (DD) file / majority of a DD file in error?
Finding out that you have submitted a Direct Debit file in error is not a situation that any organisation wants to find itself in. As well as the potential risk to the organisational reputation there is a significant impact on staff confidence and workloads whilst attempting to resolve the error – and that’s without considering the impact upon customers! An automated, integrated payments approach is the best way to prevent such issues arising; training is the best way of ensuring staff know how to deal with such issues and Clear Direct Debit can help with both of these areas. But do you know what to do if you submit a Direct Debit (DD) file / majority of a DD file in error?
Attempt to extract the file before processing
If you have submitted a Direct Debit file / the majority of a DD file in error, Bacs require you to take action to correct payers’ accounts. This is to ensure that the payers (your customers) are not adversely impacted. If you realise on input day (Day 1 of the Bacs cycle) that the file was submitted in error, you should try to extract the file by contacting your bureau / sponsoring Payment Service Provider (PSP/ bank). Extracting the file will ensure that no payments are taken from the payers account, however this is only possible before the Bacs processing day.
Ensure the customer is not out of pocket
Where it has not been possible to extract the erroneous file before it is processed by Bacs, you should contact your bureau / sponsoring Payment Service Provider (PSP) / bank for guidance and to agree the best way to proceed in order to minimise impact on payers. You should then undertake one of the following:
- Refund the payers the same day, i.e., no later than day 3 of the Bacs cycle by return of the erroneous collections via Faster Payments or CHAPS. It is advised to include Direct Debit references to assist the payer to recognise the transaction.
- Effect a reversal of the erroneous entries the same day the error is identified
- Submit a Bacs Direct Credit file with immediate effect, i.e., the same day the error is identified (including Direct Debit references to assist with payer recognition).
Wherever possible it is best to ensure that the customer is not out of pocket e.g. by extracting the file or by repaying the customer on the same day.
Keeping the customer informed
Bacs recommend the following to keep the customer informed:
- give advice of the error to the payers affected, detailing the appropriate recovery process
- issue the advice to the payers on the date the error is detected by the most expeditious means
- confirm the new collection date and amount to the payer, if appropriate, if the collection is to be made more than 3 working days after the original due date. The service user must also confirm it will meet any PSP charges incurred by the payer as a result of the error.
Ensuring that the customer is not out of pocket and keeping the customer informed should help reduce the risk of payers raising indemnity claims (which can take administrative time and experience to deal with).
The Service User’s Guide and Rules will be changed by Bacs to reflect this update. If your team would like training on these Rules, please contact us. We offer training at regional centres around the UK or onsite at your offices at a date to suit you. If you have questions about the Direct Debit error recovery process, please contact us.