Tags
Direct Debit, Guarantee
Categories
Bacs, Direct Debit, News, Training, Uncategorized
Date
18, FEB 2013

The Direct Debit Guarantee is one of the main reasons that the Direct Debit Scheme has been so successful.

Reassurance for the payer

The Guarantee protects the payer from any errors made by the bank / building society or the organisation, (the Service User), collecting the Direct Debit. If an error is made in the amount collected or the date of the collection, the payer can request that the bank provide a full and immediate refund of the money taken. Usually, it will reappear within the payers bank account within 2 hours. It also confirms to a payer that he/she may cancel a Direct Debit at any time.

Responsibilities

Banks / Building Societies:
It is the payers bank or building society who actually provide the Guarantee to the payer – not the service users bank / building society. If a payer requests a refund therefore, their bank will provide the refund and then take the money back from the service user.

Service Users:
They must:

  • provide payers with a copy of the Direct Debit Guarantee BEFORE any Direct Debit is collected from the payers account. This is typically provided at the time of initial sign up and is often included on the Direct Debit Instruction – though it can be provided after initial sign up i.e. in a confirmation letter to the payer.
  • Provide the Guarantee in English – or in a bi-lingual Welsh format,
  • Use only the approved version of the Guarantee – check if you are using the correct version of the Direct Debit Guarantee.

Reassurance for the Service User

Whilst the bank will refund any money under the Guarantee that the payer believes has been collected in error, this refund relates solely to the direct debit. If a payer has entered into a contract with an organisation for the receipt of goods or services, then this contract is still valid and is unaffected by the refund of the Direct Debit. Payment is still due and the service user is entitled to approach a payer and request payment by another means. The Guarantee also states that any refund received by a payer that they are not entitled to, must be paid back when the organisation requests it.

Questions?

Do you have questions about your responsibilities under the Direct Debit Guarantee? If so, please contact us to discuss these further.