Direct Debit, Scheme Rules
Bacs, Direct Debit
11, DEC 2019

Bacs have issued new Direct Debit Scheme rule updates

Version 5.3. January 2020.

Article by Sarah Cottee. Training Manager.

There are new Direct Debit Scheme Rule Updates which will take effect from January 2020. As a Direct Debit Service user, you have a responsibility to comply with the Direct Debit Rules. Are you?

To help you plan ahead for 2020 we have compiled the following overview of the key changes in this version of the Direct Debit Rules:

1. Auddis is now the dominant process

There has been a change of emphasis throughout the rule book to reflect AUDDIS (Automated Direct Debit Instruction Service)  as the preferred and dominant process. This highlights the fact that it is likely at some point Non Auddis (sending your Direct Debit Instructions to the bank via post) may come to an end. We don’t at this point know when this might be but this is why it may be worth considering making the move to Auddis/Paperless.

Further details about the benefits of Auddis can be found on our website and if you are considering moving to Auddis and need some assistance please get in touch so we can help.


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.

Where Paperless Direct Debit sign up is being outsourced to a third party e.g. a call centre, the service user is responsible for the actions of the organisation acting on its behalf. Therefore it is highly recommended that the payers account details are passed between the service user and the outsource agent by an automated link. This will protect against incorrect re-keying of information and therefore go a long way towards eliminating discrepancies in key fields i.e. payer’s sort code, account number and name, and ensuring compliance with the AUDDIS rules.​​


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 recognise it isn’t always possible to do modulus checking at the point of sale ( e.g. with E signatures).

4. 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 the following recovery activities (in agreement with their sponsoring participant).

  • If time allows i.e. on or before input day, arrange to extract the file
  • 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 (including DD references to assist with payer recognition)
  • 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 DD references to assist with payer recognition).​

Where it has not been possible to extract the file before it is processed by the Bacs service, the service user must:

  • Contact their sponsor to agree the best approach to minimise impact on payers
  • 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.​

Reason code 2 counter claim has been withdrawn and now forms part of the challenge process. In previous versions of the scheme rules, indemnity claim reason codes were split into valid counter claims and valid challenges.

Indemnity Claims are a tricky area. If you experience these and would like further advice, please contact us and we can review this with you.


There may be occasions where a service user needs to change the details on a Direct Debit Instruction (DDI) already held with the paying PSP.

Where this affects only one or a small number of DDIs this would usually be effected by obtaining new DDIs signed by the payer and lodging them with the paying PSP. If the change affects a large number of DDIs, as an alternative to obtaining new DDIs, the service user may wish to use the Bulk Change Process (BCP).

AUDDIS service users wishing to amend only the reference on a single DDI may do so by advising the payer in writing and submitting a 0C/0N to amend the DDI.​

Note: With the exception of a change in service user name the Bulk Change Process is only available to AUDDIS service users.

Other Changes

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

  • A service user’s telephone number or email address may be included in the advance notice. The Rules previously only mentioned telephone number.
  • The value of a paper Direct Debit Indemnity Claim has been raised to from £100,000 to £125,000 or above.
  • Clarification added to ADDACS reason code R that a 0C/0N pair must not be sent on receipt of the message
  • It must be apparent to the payer who is collecting Direct Debits therefore the name of the service user must be made clear to the payer within the paperless direct debit script

When did your team last attend Direct Debit scheme training? if any of your team members are new to the role, have not attended training in the last 3 years or if you have made or are planning to make significant changes to your Direct Debit processes it may be time to consider arranging some training. Please see further details about our training courses on our website.

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 01737 826 957 or email us on info@cleardirectdebit.co.uk.