Scheme Rules
Bacs, Direct Debit, Indemnity Claims, News, Paperless Direct Debit (PDD), Smart Cards, Training
02, FEB 2021

There are new Direct Debit Scheme Rule Updates which will take effect from January 2021. As a Direct Debit Service user, you have a responsibility to comply with the Direct Debit Scheme Rules. Are you?

Version 5.4. January 2021

Article by Sarah Cottee. Training Manager.

We are all looking for 2021 to be a better year, so to help you plan for 2021 we have compiled the following overview of the key changes in this version of the Direct Debit Scheme Rules:


If you are a Paperless Service User i.e., you sign payers up to Direct Debit via telephone or through your website then validation and verification of the payer and their account details is vitally important. You must make sure that the person is who they say they are and that their account details are correct at the point of sign up. Most Service Users understand this process when signing up new payers, but forget when it comes to changing existing payers information. 

  • Validation and verification must also be undertaken by Paperless Service Users when an existing customer contacts you directly to provide alternative account details.  

In most cases when a payer changes their bank details, you will be notified of this on an ADDACS Report (Amendments & Cancellation). In some cases a payer may contact you directly to inform you of the change. If they do then you must:

  • Obtain the payer’s bank account details including the sort code, account number and account name
  • Verify the identity of the payer, address, and account details – ensuring that the details provided relate to the payer

Remember failure to verify these details may result in an increased risk of fraud and as a consequence indemnity claims being received. It is recommended that verification is achieved by using historical data from your records or for new customers by using one of the methods included on the list of verification which include KYC Checking (Know Your Customer).

  • Paperless telephone sign up – reconfirming account details during sign up details.

If you sign up your payers for Direct Debit via telephone, then as part of the script you must re confirm the payers bank details. This may be achieved by asking the payer to reconfirm the details provided or by you reconfirming the details taken.

If you’d like to introduce paperless direct debits but don’t have the resources available to get it set up, why not get in touch with us? We offer tailored direct debit consultancy to help organisations get started 

Advance Notice

  • Service Users wishing to collect on the last day of the month you may now advise this in the Advance Notice.

When advising your payer of the date of your first or next collection it has always had to include Day/Month/Year. Where collections are scheduled for the last day each month you are now allowed to use the wording “last working day” within your Advance Notice:

‘£10 will be collected on the last working day of the month or immediately after’.

  • Notification must be sent to the payer each time when providing Advance Notice via a secure website.

Some Service Users make Advance Notice (AN) available to their payers via a secure website or portal. To use this method the payer must always receive notification whenever a new AN has been made available to them.  Where the payer has provided an email address or mobile number and has been advised that this method of notification will be used. You may provide details of a payer’s Direct Debit collection(s) via a secure website.

When providing notification via a secure website it must be in a durable medium e.g., an invoice, which allows the payer to store and access the information and reproduce it unchanged. The payer must be advised via their usual notification method e.g., email / text, and in accordance with their advance notice period, each time that advance notice is available to view.

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 rules, which includes Direct Debit Advance Notice rules. Find out how our Accredited Direct Debit Scheme Training can help you.

Indemnity Claims

  • Direct Debit Indemnity Claim report (DDIC) Challenge process – Evidence for a challenge should include sufficient information as the paying bank may reasonably require for validation purposes.

If you receive details of an Indemnity Claim that you can prove is not correct then you can counter claim. This must be done within in 9 working days of receiving the Direct Debit Indemnity Claim report (DDIC) and you must provide detailed proof. It is important that you supply enough information so the bank can do their own validation.

As well as attaching your evidence in an email you should also include the following:

  • Date & Amount of the claim
  • Advice reference
  • Service user number
  • The reason for the challenge being raised
  • Contact name and telephone number
  • Advise what supporting evidence you have

If you have any questions or there is anything you are unsure about regarding Direct Debit Indemnity Claims please contact us and we can give specific advice and support. Call us on 01737 826957 or email us on info@cleardirectdebit.co.uk.

Primary Security Contacts (PSCs)

A Primary Security Contacts (PSCs) is the first point of contact for BACS if they need to contact you. Every Service User must be associated with at least two PSCs. PSCs usually receive Smart cards to enable them to make submissions to BACS. In addition, PSCs can access the BACS Web Interface (Payment Services) where they can perform all administrative tasks, for example setting up additional contacts etc.

If you are a Direct Submitter i.e., you use software to submit Direct Debit files to BACS then you must have at least 2 Primary Security Contacts (PSCs) registered with BACS. It is a good idea to have multiple contacts registered in case anybody leaves. 

If you are an In-Direct submitter i.e., you use a Bureau to submit to Bacs then Bureau staff cannot be a Primary Security Contacts (PSCs) for a Service User Number (SUN)

If there are ever any changes to the details of your Primary Security Contact, you must notify your sponsoring Bank asap. If these details are not kept up to date then it can affect your processing.

Common problems we see all the time include:

  • Services Users having issues with locking out Smart cards
  • New Smart cards not arriving in time for the next collection date, because the Bank wasn’t informed early enough.
  • Forgetting to update the Bank with details of new security contacts and now the bank wont talk to them because they are not a Primary Security Contact. 

The easiest way to stop these issues would be to use a Bureau service, where you don’t need to use a Smart card. You could move all your Direct Debits over to a bureau or even use it as a back-up.

Do you have a contingency plan in place?

Don’t forget, when it comes to Direct Debit the best back-up plan you can have is linking your Service User Number to a Contingency Bureau. This means you can continue with your current processing solution, but if something goes wrong you have a Plan B.

We Can Help

If you would like to know more about our Direct Debit Training,  Consultancy Services or our Bacs Bureau Service then we are ready to take your query. Contact us on 01737 826957 or by email at info@cleardirectdebit.co.uk.