Direct Debit, Paperless Direct Debit, Scheme Rules
Bacs, Direct Debit, News, Uncategorised
19, AUG 2020

2020. For Bacs Direct Debit Service Users, it was a busy year. There were several Direct Debit rule changes and various challenges – not least the changes to working practices and Payer behaviour brought about by COVID-19. Here’s our rundown of what happened!


Blog by Sarah Cottee, Training Manager


The latest version of the Bacs Direct Debit Scheme rules was released (v5.3), which saw several Direct Debit rule changes, including:

AUDDIS is now the dominant process – There has been a change of emphasis throughout the Bacs rules to reflect the fact that AUDDIS (Automated Direct Debit Instruction Service) is now the preferred and dominant process. This highlights the fact that it is likely at some point non-AUDDIS processes (sending your Direct Debit Instructions to the bank via post) may come to an end.

Changes to the Paperless Direct Debit sign-up process – The rule requiring an automated link between a Paperless Direct Debit Service User and their outsourcing agent has been changed to a best-practice recommendation.

Validation and verification of Payers’ details and their account details – It is mandatory for Paperless Direct Debit Service Users to apply modulus checking prior to submission of the 0N transaction. The rule has now been changed to say it is best practice for Paperless Direct Debit Service Users to apply modulus checking at point of sale. This is because Bacs recognises it isn’t always possible to do modulus checking at the point of sale (e.g. with e-signatures).

Changing existing Direct Debits and Error Recovery – The rules have been updated to mandate corrective action by the Service User where the majority of a Direct Debit file has been submitted in error. To ensure that the Payers are not adversely impacted, the Service User must undertake one of several recovery activities (in agreement with their sponsoring payment service provider). The rules also now highlight options of what to do if it has not been possible to extract the file before it is processed by the Bacs.

For further details on all the changes to Direct Debit Scheme rules, please see our blog on Direct Debit Scheme Rule Updates. Remember, as a Service User you have a responsibility to comply with the Bacs Direct Debit Scheme rules and it is vitally important that you stay up to date with them. The easiest way to do this is to attend Direct Debit Scheme Training. For further details about all our Clear Direct Debit training options including online, onsite and regional courses please see our website.


It was a month of bad weather and whispers about Covid so there was a real emphasis around planning. In particular, many organisations were conducting their own Direct Debit reviews and looking at their contingency plans in case of disruption to normal working life.

I still remember thinking in February that Covid wouldn’t hit the UK, or have a big impact if it did. How wrong we were! At Clear Direct Debit we spent time helping organisations review their contingency planning – see our blog for useful information you may require in an emergency. Don’t forget, when it comes to Direct Debit the best back-up plan you can have is linking to a Contingency Bureau. This means you can continue with your current processing solution but if something goes wrong, you have a plan B. Issues that could impact include:

– if a user is away on leave, furlough, sick or made redundant
– your smart card breaks or expires
– you cannot access your office (lockdown)
– you cannot access your current processing solution remotely

For further details about our Bureau contingency offering please see our website.


As the public reacted to news about Covid-19 and lockdown, fuelled by media prompts for people to check their spending, we saw a significant increase in cancelled Direct Debits. Many Payers went onto their online banking and started cancelling everything. This caused an increased workload and concern for many Service Users. For advice on dealing with cancellations and what actions you can take, see our blog about Cancelled Direct Debits.


Some Service Users operating a paper-based Direct Debit Scheme were struggling to maintain normal operations. Many were unable to access their offices this month and so receiving Direct Debit Instructions and then posting these to the bank was proving problematic. This highlighted the benefits of moving to AUDDIS – the Automated Direct Debit Instruction Scheme. New Direct Debit Service Users are now started on AUDDIS and we saw a real increase in existing Service Users wanting to implement the change in this month. If you haven’t yet done so you can read information on moving to AUDDIS on our website.

If you are considering moving to AUDDIS you may need to do an AUDDIS Migration. Organisations will only ever undertake this once so it’s not easy for Service Users to gain any experience in the area or to fully predict all the possible beartraps. That’s where we can help. Over the years we have supported many Service Users undertaking AUDDIS Migrations. We have provided advice and guidance for some; full project management for others, and have even been called in half-way through to rescue an AUDDIS Migration that had gone wrong! See more on our consultancy services to help support your move to AUDDIS and AUDDIS migration.


The ongoing effects of Covid started to highlight issues around sending out Advance Notices. Many Service Users operating a paper-based Direct Debit scheme were unable to post Advance Notices – especially those relying on the services of mailing houses who were still operating limited services. Service Users can send Advance Notices electronically – but only if they store email addresses. Again, this is something to think about and, if you have not done so, now would be the time to consider using electronic communication. It offers lots of benefits – it’s cheaper, faster, involves less admin and, of course, is better for the environment – think of the trees!


Bacs decided to help out Service Users who usually collect annually by temporarily extending the standard Direct Debit Dormancy period. From 29 June 2020 the minimum Dormancy period (the amount of time after which a Direct Debit will expire if not used) for all Service Users was increased to 24 months. This meant that if you put your annual Direct Debits on hold, you wouldn’t run the risk of them expiring.

Lockdown was also starting to ease in June so many Service Users were looking to start getting back to normal. For many, this meant a Direct Debit review and steps to make improvements to process issues that were highlighted during the lockdown. For many organisations, changes in staff duties, (due to furlough, redundancies and absences) had increased errors in their collection processes. Often when staff are new or covering for colleagues, they know which buttons to press but not necessarily why they are doing what they doing. As a result, our online training courses as an alternative option to face-to-face training saw high demand.


We saw a significant increase in enquiries regarding moving to Paperless Direct Debits. Lockdown highlighted the difficulties inherent with a paper-based Direct Debit system. As offices and mail houses were closed – interrupting the flow of paper Direct Debit Instructions (DDI) – many organisations decided to embrace the move to Paperless in case of further lockdowns. For those organisations that have yet to do so, here is more info about why Paperless Direct Debits might be suitable for you. Remember – we can also offer Paperless consultancy services to assist you in this process.

In July, Bacs also released their newsletter, Are you prepared for your well-earned break? The newsletter highlighted how recent easing of lockdown restrictions had allowed many to consider travel plans and holidays once more. This really drove home the message about how vitally important it is that:

– all staff members are fully trained and up to date with their Direct Debit knowledge

– all staff members have their own smart cards. Remember, the sharing of smart cards is a serious breach of Direct Debit Scheme rules


Since the start of March, the number of Direct Debit questions we have received from Service Users has increased considerably, which is perhaps not surprising considering the changing Direct Debit rules. The disruption brought by the COVID-19 lockdown and associated changes to working environments and processes has resulted in uncertainty – and even panic – for some, with confidence in their Direct Debit knowledge going out the window!

Is it time for you to conduct your own Direct Debit Review? Check out our recent blog on Frequently Asked Questions for help on different topics and, as always, if you have any questions at all please feel free to get in touch with our team of Direct Debit experts: info@cleardirectdebit.co.uk or 01737 826957.