Understanding the Direct Debit Guarantee
If you’re new to the world of Direct Debit, you may be wondering what the Direct Debit Guarantee is all about. In short, it’s a protection that offers peace of mind to both Service Users and Payers.
What is the Direct Debit Guarantee?
The Direct Debit Guarantee is a protection scheme that covers any errors in the payment of a Direct Debit. It offers a safety net to Payers, who can claim for any mistakes made in the amount or date of payment. The Guarantee covers all Direct Debits, and there is no time limit on making a claim.
Reassurance for the Payer
The Direct Debit Guarantee offers reassurance to Payers that they’re protected from any errors made in the payment of a Direct Debit. This includes errors made by the bank or building society, as well as the Service User collecting the Direct Debit. If an error is made, the Payer can request an immediate refund from their bank or building society. Usually, the refunded money will appear in the Payer’s account within two hours. The Guarantee also allows Payers to cancel a Direct Debit at any time.
Responsibilities
Under the Direct Debit Guarantee, responsibility for managing the scheme is shared between the Service User and the Payer’s bank or building society. Let’s take a closer look at the responsibilities of each party:
Banks/building societies
It is the Payer’s bank or building society that provides the Guarantee, not the Service User’s bank or building society. If a Payer requests a refund, their bank or building society will provide it and then claim the money back from the Service User.
Your responsibilities
Service Users have a number of responsibilities under the Direct Debit Guarantee:
- Provide the Payer with a copy of the Direct Debit Guarantee before any Direct Debit payment is collected.
- Provide the Guarantee in English, or in a bilingual Welsh format.
- Use only the approved version of the Guarantee.
Reassurance for the Service User
While the Direct Debit Guarantee protects Payers from any errors in the payment of a Direct Debit, it’s important to note that this only relates to the Direct Debit itself. 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 the Payer and request payment by other means. It’s also worth noting that any refund received by a Payer that they’re not entitled to must be paid back when the organisation requests it.
In summary
The Direct Debit Guarantee is a key reason why the Direct Debit scheme has been so successful. It offers reassurance to both Service Users and Payers, and ensures that any errors are quickly and easily resolved. By understanding the Direct Debit Guarantee, you can feel confident in using Direct Debit as a payment method for your business.
If you have any questions or need further support, please do not hesitate to contact us. We are here to help you navigate the technicalities of Direct Debit management.
