Bacs, Direct Debit, Uncategorized
14, JAN 2021

Over the years, the Direct Debit Advance Notice rules have been clarified and updated to reflect current preferences and practices. Increased use of email, a preference for paperless systems, and a rise in the use of online banking have all influenced how the system currently operates.

Direct Debit Advance Notice rules

Direct Debit Advance Notice is a key cornerstone of the Direct Debit Scheme and the sole responsibility of the Service User – the organisation collecting the Direct Debit. The Service User must inform the Payer – the customer – what is going to be collected and when. This must be done before the first collection, and again if there is any change to the amount of the Direct Debit or the date on which it will be taken.

How much Advance Notice do I need to give?

Whether you are dealing with a new Direct Debit that has just been set up, or are looking to amend the amount or collection date of an existing Direct Debit, the default notice period is the same: a minimum of 10 working days. However, this period can be changed – either lengthened or shortened – provided you have the agreement of your sponsoring bank.

How do I give Direct Debit Advance Notice?

A Direct Debit Advance Notice letter sent by post is no longer the only, or default, option. With the Internet now holding its own as the platform of choice for many businesses, it was only natural that the Direct Debit Scheme should allow for an Advance Notice to be issued electronically, including via text messages and websites.

The rules about providing a Direct Debit Advance Notice following Paperless Direct Debit (PDD) sign-up were clarified in the January 2016 version of the Service User’s Guide And Rules to the Direct Debit Scheme. While it is allowed to issue a Direct Debit Advance Notice via a website, it is necessary for the Service User to advise the customer (the Payer) that the Advance Notice is available.

An example of issuing a Direct Debit Advance Notice on the web would be if your business provides online account access. An Advance Notice can be issued through that account following the successful sign-up of a new Direct Debit customer.

Prior to issuing the Advance Notice, the Payer must be told how they will receive the notice – for example, by advising the Payer during the sign-up process that statements and letters will be made available via the online account. Each time a Direct Debit Advance Notice is provided on the online account, the Payer must be informed of its availability, in line with the agreed notification period.

What information must a Direct Debit Advance Notice include?

The rules on Advance Notices state that the following details must be included:

  1. Direct Debit reference
  2. Collection amount
  3. Collection date
  4. Frequency or schedule of payments
  5. Service User contact details

The scheme allows the Direct Debit Advance Notice to be delivered in paper and electronic forms, including:

  1. Letter
  2. Invoice
  3. Statement
  4. Email
  5. Online

The Service User must seek approval of their Advance Notice template from their sponsoring bank, before issuing it to its customers.

What are the drawbacks of getting it wrong?

Failure to comply with scheme rules regarding Direct Debit Advance Notices could result in failed collections and refunds – for example, if the Payer does not have sufficient funds in the account or disputes the payment on the basis that they were not expecting it. In both these examples, there could be a serious impact both on customer relations and organisational cash flow.

At Clear Direct Debit we provide comprehensive training on the Direct Debit Scheme, including Direct Debit Advance Notice rules. Find out how our Accredited Direct Debit Scheme Training can help you.

Or, find out more information about Direct Debit processes.