Professional Documents
Culture Documents
AMENDMENTS
An outline of the main changes to The Service User’s Guide and Rules to the Direct Debit Scheme
v5.3 is given below. Please refer to the particular section for full details of the change(s)
Various Simplification and removal of duplications from the document including a change of
emphasis throughout to reflect AUDDIS as the preferred and dominant process
3B 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
3B.1 It is a best practice recommendation for Paperless Direct Debit service users to apply
modulus checking at point of sale.
It is mandatory for Paperless Direct Debit service users to apply modulus checking prior to
submission of the 0N
4B.1 A service user’s telephone number or email address may be included in the advance notice
7A & Various Reason code 2 counter claim has been withdrawn. Reason code 2 now forms part of the
challenge process.
7A The value of a paper Direct Debit Indemnity Claim has been raised to £125,000
7B 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
7E 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
14 & 14B 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 scripts
16B Clarification added to ADDACS reason code R that a 0C/0N pair must not be sent on receipt
of the message
Please note that this is not an exhaustive list and other documents may also be of assistance.
____________________________________________
2 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
COPYRIGHT STATEMENT
All rights reserved.
The copyright in this document is owned by Pay.UK Limited. All material, concepts and ideas detailed
in this document are confidential to Pay.UK. This document shall not be used, disclosed or copied in
whole or in part for any purposes unless specifically approved by Pay.UK.
____________________________________________
3 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
CONTENTS
Amendments 2
Copyright statement 3
CONTENTS 4
SECTION 1 INTRODUCTION 14
1A Purpose 14
1B Out of scope 14
1C Conventions 14
1D How to find your way around the Scheme Rules (and Guidance) 15
2A.2A Service user’s communication literature, the Bacs service input format and design of documents. 19
____________________________________________
4 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
2D THE INDEMNITY 25
3A.2 Validation and Verification of the payer and the account details 33
3A.5 Software 35
3B.1 Validation and verification of the payer and the account details 40
3C.1 Lodgement 42
____________________________________________
5 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
3D.1 Lodgement 48
4B ADVANCE NOTICE 53
5A.1 Method 61
5A.1C Reference 62
____________________________________________
6 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
5B FAILED COLLECTIONS 66
5B.1B Timescales 66
5C.2 Application 68
5C.3 Timescales 68
____________________________________________
7 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
6A.5 Dormancy 76
7A INDEMNITY CLAIMS 78
7B ERROR RECOVERY 91
7D Prohibited practices 92
____________________________________________
8 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
9 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
13A Recommended Direct Debit Instruction with service user’s ‘official use box’ 117
13B Recommended Direct Debit Instruction without service user’s ‘official use box’ 118
13C 1/3 A4 Direct Debit Instruction with service user’s ‘official use box’ 119
13D 1/3 A4 Direct Debit Instruction without service user’s ‘official use box’ 120
13G A4 Direct Debit Instruction with ‘tear-off official use slip’ 123
____________________________________________
10 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
13I Recommended Direct Debit Instruction with Standing Order cancellation request 125
13K Example internet Direct Debit for printing as a Paper Direct Debit Instruction 127
17D Example DDIC Advice Report - showing new and cancelled advices 155
____________________________________________
11 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
19B Example of a letter issued to the payer by the service user advising of a debit applied to their
account in error 161
19D Suggested layout of confirmation of Paperless Direct Debit set-up incorporating advance
notice 163
____________________________________________
12 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
There are rules which all of the organisations using our schemes – both Direct Debit and Bacs Direct
Credit – must adhere to. Your sponsoring PSP (sponsor) will be able to advise you if you are
uncertain about how to comply with any of these. The following are essential to ensure compliance:
1. Register for access to the secure section of www.bacs.co.uk where the complete Guide & Rules
documents are available. You can then check that your processes and procedures comply
2. The Guide & Rules change annually and updates and important notices will be sent to you by
email. Ensure Bacs is on email “safe” lists so that important communications we send to you are
not rejected or sent to a junk mail folder
3. Make sure you have at least two Primary Security Contacts (PSCs) registered (Indirect Users need
at least one PSC) and that your contact details are kept up to date. Any changes must be notified
to your sponsor.
4. Smartcards may be used by your organisation’s approved personnel to carry out actions
associated with the Bacs service. These Smartcards are non-transferable and a new card must be
applied for through your sponsor for new personnel
5. Reports identified within this guide can be accessed on our Payment Services Website (PSW) or
via your Bacstel-IP software. Address and log in details for this secure site will be provided by
your sponsor. It is important that reports are actioned promptly to ensure payments are made in
accordance with the Guide and Rules. Check your submissions have been successful. There are
reports available on the PSW or via your Bacstel-IP software which can confirm a payment file
has been successfully submitted or can alert you if there is an error
6. Make sure you update any databases or applications that use sorting code information at least
monthly (weekly is recommended) to ensure that up to date information is used. Regular
updates of sort code information (the ISCD or EISCD) are made available by your Bacs approved
software solution supplier
7. All Direct Debit related documentation, including any changes to existing documentation
whether printed or online, must be approved by your sponsor.
If at any stage you are unclear on actions you should take regarding the Guide & Rules, you can
contact either your sponsor, or the Bacs helpdesk on 0370 765 0018. Bacs provides online training
and also supports an approved training scheme to help you successfully use and comply with our
payment schemes. Visit the training pages on the Bacs website at www.bacs.co.uk/training
____________________________________________
13 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
SECTION 1 INTRODUCTION
This Guide and Rules replaces all previous Direct Debiting Scheme Guides & Rules available to
service users, but no statement made in this guide is to be taken in any way whatsoever to
prejudice the rights of PSPs under the Direct Debit Indemnity.
The rules will evolve over time and will be revised and updated as necessary. It is the service
user’s responsibility to ensure they are using the latest version of the rules which can be found
at: www.bacs.co.uk/documentlibrary
No departure from the rules is allowed. If in doubt as to interpretation or application contact
your sponsor.
1A PURPOSE
The intention of this Guide and Rules is to standardise the Direct Debit Scheme and its application for
all participating organisations.
The mandatory requirements detailed in this document are marked as a “Rule” and will be found in
each appropriate section. In order to ensure rule clarity and avoid ambiguity the words ‘must’ and
‘shall’ are used in the text.
This document is intended for service users to apply the Rules of the Direct Debit Scheme and
operate within the set procedures as defined. To help to make the rules easier to follow, the text has
been divided into a series of high-level sections and follows a flow from joining through to exit from
the Scheme. Access to example documents and some ‘guidance’, considered as best practice, is
available by the use of links.
Reference to paying PSPs procedures and responsibilities are for the service user’s information. PSP
charges for Direct Debit fall within the banker-customer terms and conditions of each PSP and as
such are outside the scope of the Direct Debit Scheme.
The Direct Debit Scheme may be used only to collect amounts in pound sterling within the United
Kingdom (for this purpose this includes the Channel Islands and the Isle of Man).
1B OUT OF SCOPE
This guide provides rules for the service user’s involvement with the Scheme. It is not the purpose of
this guide to cover a service user’s wider legal and regulatory obligations in respect of or relating to
Direct Debit, such as the application of the Data Protection Act 2018, the Proceeds of Crime Act 2002
or the Payment Services Regulations 2017, however service users should be aware of their
responsibilities in respect of these and any other legal and regulatory requirements.
1C CONVENTIONS
In this document the term payment service provider (“PSP”) is generally used to include banks,
building societies and other credit institutions participating in the Scheme on behalf of
____________________________________________
14 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
customers. Not all such PSP’s are banks for the purposes of applicable laws, statutes, statutory
instruments, orders, regulations and rules in force from time to time.
- Payers may not be familiar with the term ‘payment service provider’ therefore where text
relates to a payer’s involvement in the Scheme the term bank / building society has been left
e.g. completing the DDI; the wording of the Direct Debit Guarantee; the Paperless Direct
Debit scripts.
The title ‘AN Company Limited’, ‘FM Client’, ‘ABC Agency Bank’, ‘Any Bank Plc’, ‘ABC sponsor’,
and ‘A service user’ are quoted as fictitious company names throughout this guide.
These sections are listed on the contents page at the beginning of this document. It starts with the
essentials of using Bacs and an overview of the Scheme through to becoming a service user and
setting up the Direct Debit Instruction (DDI), to amendments and cancellations and how the Scheme
is monitored.
Glossary of terms - Bold italicised text on each page denotes that a brief explanation of the word can
be found in the online ‘Glossary of terms’ which is available from www.bacs.co.uk/Glossary.
Cross referencing - An item or topic in one section may also appear in another section or later in the
same section. Where this is considered to be significant, a cross reference to that section has been
included.
Bacs website - Bacs documentation referred to within this document is available in a password
protected area of the Bacs website. Registration can be completed via the ‘login’ screen at
www.bacs.co.uk.
Bacs is the institution responsible for the administration and management of the Direct Debit
Scheme. On 18 October 2018 Bacs became a wholly owned subsidiary of Pay.UK.
____________________________________________
15 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
16 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Introduction
An organisation wishing to join the Scheme should contact its PSP who will advise the steps involved
in becoming a service user. PSPs will consider the request to sponsor the organisation as a Direct
Debit service user. The organisation must execute an indemnity in favour of all PSPs participating in
the Scheme.
Rule: The service user must submit all documentation (including any subsequent changes) relating to
its Direct Debit operations to its sponsor for prior approval.
Guidance: The Scheme may be unsuitable for non-corporate bodies because the indemnity liability
may fall directly upon individuals without limitation as to time and amount. Under these
circumstances it is recommended that you seek legal advice.
There are different versions of the indemnity according to the legal status of the organisation.
On acceptance of an organisation’s application, a unique Service User Number (SUN) is allocated.
____________________________________________
17 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
contractual capacity
financial standing
the quality of its administrative control.
Rule: A service user must have a UK sterling account and must provide a UK telephone number for
queries relating to the submission of paper indemnity claims, See section 7A.6.
Rule: A service user must complete and lodge an indemnity with its sponsor (section 2D ‘The
indemnity’).
Third party support for the liability assumed under the indemnity is unacceptable to the sponsor. In
this context however, the relationship between parent and subsidiary companies is not deemed a
third party relationship, and may be taken into consideration for so long as it lasts, provided an
indemnity has been given by the parent company.
Service users who hold an account with more than one PSP may be sponsored by one or more of the
PSPs. Collected funds must be credited to an account in the name of the service user which must be
held by the sponsor(s). Each sponsor shall be responsible, without limit of time and amount, for
Direct Debits collected under the service user’s account maintained with it under that SUN.
Rule: If an agency PSP wishes to nominate one of its own customers as a service user under the
Direct Debit Scheme, then the agency PSP must ensure the following are adhered to:
The customer (the service user) must complete one of the standard forms of indemnity. Refer to
section 2D.
The agency PSP must indemnify its sponsor by signing an agency bank indemnity.
It must complete an agency bank Letter of nomination, proposing its customer as a Direct Debit
service user
It must adopt the standard set-up procedures as per any other service user.
The agency PSP is responsible for ensuring its customers adhere to the Scheme Rules.
____________________________________________
18 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
If the application is accepted by the sponsor, the service user will be allocated a unique Service User
Number (SUN) which must be quoted on all DDIs and the records sent via the Bacs service.
The SUN and the service user’s registered name will be advised to all the sponsors and Bacs by the
service user’s sponsor. Service users must ensure that they quote their registered name within all
lodgement & collection files as well as on all Direct Debit communications.
Service users will be notified by their sponsors when their SUN is set-up on the Bacs database. They
must allow at least 4 weeks from this date before lodgement of DDIs with the PSPs (ensures all
parties have been notified).
Rule: A service user can only collect Direct Debits using the SUN on the DDI signed by the payer. If
the service user wishes to collect from the payer under a different SUN it must obtain a new DDI
from the payer. The same SUN cannot be used by more than one service user.
2A.2A SERVICE USER’S COMMUNICATION LITERATURE, THE BACS SERVICE INPUT FORMAT AND
DESIGN OF DOCUMENTS.
Rule: The service user must obtain prior approval from its sponsor for all documentation it intends to
use within the Direct Debit Scheme including but not limited to:
Rule: BEFORE being allowed to access the Bacs service 2 members of the service user’s staff must
successfully complete the mandatory training course (eLearning) ‘The Essentials of using Bacs’.
Further details will be provided to the service user by its sponsor.
Guidance: Bacs offer a wide variety of materials and courses to help organisations train their staff.
For further information visit www.bacs.co.uk/training
Authorisation of a variation in procedure will not diminish any liability under the indemnity that
might otherwise arise.
____________________________________________
19 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Further information relating to variations to standard set-ups can be found in Appendices section 11.
____________________________________________
20 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
The AUDDIS rules are in addition to the existing Direct Debit Scheme Rules, as detailed in this guide,
which otherwise apply except where varied by the AUDDIS rules.
Rule: The use of AUDDIS to submit Direct Debit Instructions (DDIs) is mandatory for all new service
users that submit direct to the Bacs service. All new service users must also complete the mandatory
‘Essentials of using Bacs’ eLearning training course.
A Guide to the AUDDIS Service, which includes the benefits, can be found on the Bacs website at.
www.bacs.co.uk/AUDDISServiceGuide
AUDDIS (Automated Direct Debit Instruction Service) transfers DDIs electronically between service
users and PSPs via the Bacs service using a ‘0N’ transaction code. The paying PSPs validate the DDIs,
either accepting them or returning them to the service user. This validation confirms that the
technical requirements have been complied with; it does not provide confirmation that the paying
PSPs customer has authorised the DDI. If these are rejected the paying PSP will advise the service
user electronically via the Bacs service. Refer to Appendices section 17A for an example of an AUDDIS
returns report.
All DDIs must be sent electronically via the Bacs service without exception. The paper DDI remains
with the service user. It is up to the service user to decide how long to retain the paper and the
method of storage, see section 3C.3.
Rule: The service user must provide a copy of the DDI within 7 working days if requested by the
paying PSP. If a copy cannot be produced or the DDI is incorrect or fraudulent, then the service user
must accept liability under the terms of the Direct Debit indemnity.
The receipt of a ‘0N’ AUDDIS transaction is used by some paying PSPs to inform the payer that a new
DDI has been set-up on their account. Refer to section 3C.1 ’Transaction codes’.
Service users may collect Direct Debits 2 working days following lodgement (5 working days after the
0N is submitted) however, where collection timescales allow, 0N rejections should be actioned
before the first collection is submitted. Refer to section 3C.1 ‘Lodgement of new ‘0N’ Direct Debit
Instruction’.
____________________________________________
21 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: The service user must complete a separate application for each SUN.
Rule: Service users already using Direct Debit for an existing operation must allow at least 4 months
between submission of their application form and the proposed joining date.
A new service user, or service users with new SUNs, must allow a minimum of 8 weeks for their
application to be processed before the intended ‘live’ date.
The sponsor will control and monitor service users on to the AUDDIS service to ensure a smooth
transition. This can take place either by:
or
A service user wishing to convert existing DDIs to AUDDIS has the following options.
Rule: Before conversion commences the service user will be required to submit successful AUDDIS
test files to Bacs.
The sponsor will liaise with the service user on the requirement for AUDDIS test submissions. Full
details of the requirements for testing and migration to AUDDIS are available in AUDDIS – A
Migration Guide for Direct Debit service users’.
The conversion of existing DDIs for a service user’s SUN to AUDDIS will usually take place on one day.
The service user then has a month to correct all rejected DDIs. At the end of this ‘migration’ period,
the service user’s SUN will be set to live AUDDIS status.
A copy of the Bulk Change Process is available from the document library at www.bacs.co.uk.
Rule: If a service user wishes to merge two SUNs, the service user must ensure that there is no
duplication of core references. Before undertaking this exercise, the service user must again liaise
with the sponsor who will need to advise you of the requirements.
____________________________________________
22 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: Once a service user becomes an AUDDIS user, either by using a new SUN or converting an
existing SUN to AUDDIS, all DDIs without exception must be submitted via AUDDIS for that SUN.
____________________________________________
23 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
The Paperless Direct Debit application can be submitted at the same time as its application for
AUDDIS. Alternatively a service user may wish to apply for Paperless Direct Debit at a later date. The
AUDDIS application timescales are applicable in all instances. Refer to section 2B ‘AUDDIS service
user set-up’.
Rule: A service user wishing to join the Paperless Direct Debit Service must apply to its sponsor who
will assess the application. The service user must complete a separate application for each SUN.
Rule: A service user can only operate the Paperless Direct Debit sign-up method authorised by its
sponsor. If additional methods are required the service user must make a further application to its
sponsor.
Rule: A service user wishing to carry out Paperless Direct Debit sign-up must comply with the
following requirements on an ongoing basis:
A service user must have live status within AUDDIS before operating Paperless Direct Debit
A service user must only use their AUDDIS SUNs for Paperless Direct Debit applications
No documentation for use within the Paperless Direct Debit Service shall be used by a service
user without prior approval from its sponsor. This requirement covers all documentation to be
used but particularly the following:
- The script for telesales staff, face-to-face, telephone keypad and internet screens
- Direct Debit confirmation
- Advance notice
- The Direct Debit Instruction.
Rule: Before commencing use of the Paperless Direct Debit service, 2 members of the service user’s
staff must successfully complete the mandatory Paperless Direct Debit eLearning training course. In
addition all new service users must complete the mandatory ‘Essentials of using Bacs’ eLearning
training course. Further details will be provided to the service user by its sponsor.
____________________________________________
24 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
2D THE INDEMNITY
Introduction
Rule: As a condition of participation in the Direct Debit Scheme, all service users must execute a
standard form of indemnity which must be obtained from its sponsor. By executing the indemnity
the service user is bound by the terms and conditions of the indemnity; see section 2D.4 for an
example of a standard indemnity. The purpose of the indemnity is to underwrite the protection
offered to the payer under the Direct Debit Guarantee.
a) Time - the liability will continue in respect of Direct Debits originated prior to receipt by the PSPs
of written notice of termination of the indemnity
b) Amount - the liability of a service user arises in respect of Direct Debits originated in error. Also
where a service user has failed to collect, consequential losses attributable to such errors may also
arise (e.g. failure to collect an insurance premium can result in loss of cover). Refer to section 7A.7
‘Consequential Loss’.
The indemnity should be completed in black ink using block capitals. Wherever possible, the
indemnity should be executed as a deed in compliance with the Companies Acts or equivalent
legislation. If execution in this manner is not possible, advice should be sought from the sponsor. Any
alternative method of execution will always require an authorising resolution to be given by the
board or other governing body of the service user.
Rule: After execution, the signed indemnity and accompanying authorising resolution (if,
exceptionally, the indemnity is not executed as a deed) must be returned by the service user to its
sponsor.
Rule: A service user must immediately advise its sponsor if there is any change in its legal status,
including a change brought about by merger or insolvency. In this event, the service user must obtain
new DDIs from its payers.
Subject to specific criteria and safeguards arrangements can be made to transfer DDIs from one SUN
to another, and to a different legal entity, using the Bulk Change Process. This is available from the
document library at www.bacs.co.uk. See also section 7E.
Rule: Service users must refer to their sponsor if they wish to make such arrangements.
Rule: Should a service user cease to collect Direct Debits under the Direct Debit Scheme, the service
user must provide written notice of termination to its sponsor. The service user will continue to be
liable for all Direct Debits originated during its period of participation in the Scheme and any
subsequent indemnity claims raised by the paying PSPs.
____________________________________________
25 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
The Indemnity
Rule: In order to participate in the Paperless Direct Debit Service, a service user must have executed
an indemnity, refer to section 2D ‘The Indemnity’, in one of the forms introduced with effect from
1.1.2004. However, a service user who was authorised before that date to participate in the
Paperless Direct Debit Service i.e. executed a specific Paperless Direct Debit indemnity under the
arrangements then in force may continue to do so. This indemnity remains in full force and effect.
Other Liabilities
Rule: Paperless Direct Debit service users must be aware of the associated additional risks involved in
using the service:
Failure to verify the identity of the customer and validate their account details may lead to
unauthorised / fraudulent DDIs being set up resulting in Direct Debit indemnity claims being
raised. Refer to section 3C.1 ‘Validation and verification of the payer and the account details’.
Service users must maintain appropriate archive records of DDI sign-up to enable them to raise a
counter claim or challenge an indemnity claim received, see section 7A.1.
The service user must consider the wider reputational issues for the Scheme particularly with
regard to the risk of fraud. Paperless Direct Debit may not be suitable for some transactions such
as high value payments due to the unlimited liability under the indemnity
Rule: For the protection of payers, the following minimum standards are required:
Service users shall maintain archive records of all communications with the payer, i.e. Direct
Debit confirmation and advance notice
The service user must have a method of confirming to the payer that the internet Direct Debit
Instruction has been set up, e.g. a log of the DDI sign-up.
Service users may be subject to annual reviews of their Paperless Direct Debit process and
procedures and a failure to comply with the Scheme Rules may result in the removal of sponsorship
and exclusion from the Direct Debit Scheme. Refer to section 8 ‘Monitoring of the Scheme’ and
section 9 ‘Exit from the Scheme’.
____________________________________________
26 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
27 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: A service user must seek guidance from its sponsor before using any of these forms.
*Note that execution by a sole trader or by any person on behalf of a club, society or other
unincorporated association imposes unlimited personal liability on the signatories, who are strongly
recommended to take legal advice before giving the indemnity.
____________________________________________
28 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
29 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Introduction
A payer’s authority to collect monies by Direct Debit is called a Direct Debit Instruction (DDI).
The Direct Debit Scheme provides for DDIs to be obtained and lodged in three separate distinct
ways:
AUDDIS – A paper Direct Debit Instruction is signed by the payer and returned to the service user
who then transmits an electronic message to the payer’s PSP; the paper copy remains with the
service user
Note: It is mandatory for all new service users that submit DDIs direct to the Bacs service to use
AUDDIS
Paperless Direct Debit - service users capture the payer’s authority in other than a paper form,
subject to approval of their sponsor. Such service users then use the AUDDIS service to submit an
electronic message to the payer’s PSP.
Non-AUDDIS – A paper Direct Debit Instruction is signed by the payer and returned to the service
user who then posts the original DDI to the payer’s PSP keeping a copy for their own records as
necessary
This section elaborates on the approach for service users adopting each of the above sign-up
methods.
____________________________________________
30 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: It is important that the DDI provides all the necessary information to enable collection by Direct
Debit and that the payer is provided with a clear understanding that they have given their authority
to debit their account. There is a standard format for the paper DDI which has been designed to
make it easy for the payer to complete and to ensure that all the details necessary to set up the DDI
are obtained.
Rule: The design of all paper DDIs must be approved in writing from the service user’s sponsor before
the DDIs can be issued by the service user. Where it is intended that additional information for
payers should be printed on the reverse of the DDI, the sponsor’s approval in writing must first be
obtained.
The requirements for the standard DDI are given below applying also in all other cases unless
otherwise stated.
Rule: The only additional information which is permitted on the DDI is an optional area for a service
user’s official use only, and the service user’s company logo. The service user’s official use area is
provided solely for the internal use of the service user and text in this box will not be read by the
paying PSP. It must include the words shown in the example form in the Appendices section 13.A.
Guidance: Service users are advised to print the Direct Debit Guarantee on the bottom of the DDI as
a tear off portion to be retained by the payer.
____________________________________________
31 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: For service users who include a DDI within a publication i.e. magazine / journal, the DDI must
still hold the above information however the Direct Debit Guarantee may be omitted due to the
constraints of available print space. Service users must however include a copy of the Direct Debit
Guarantee with the payer’s advance notice or other correspondence to the payer. Refer to section
4B ‘Advance notice’.
Rule: All DDIs must be variable in terms of amount, date and frequency. As such, the amount, date or
frequency, must not be quoted on the DDI, the exception being in the service user’s ‘official use box’.
However, these details must be advised to the payer by advance notice.
Rule: The following design requirements must be complied with (unless annotated ‘Guidance’). For
further information on the correct design of a DDI and use of the Direct Debit logo download a copy
of ’Brand Guidelines, DDI and DD Logo’ from www.bacs.co.uk/DDI:
The prescribed order of information boxes must be maintained on the face of the Instruction -
Refer to Appendices section 13 for DDI templates
The maximum size of a DDI must be A4. 1/3 A4 size DDI is also acceptable
The minimum size of a DDI must be 110mm by 70mm, this includes published instructions
The DDI must be clearly separated from any other text. No additional material can appear within
the boundary of the Instruction, with the exception of the official use box
The paper Instruction delivered to the branch must be rectangular to facilitate ease of handling /
storage
The presentation of the Direct Debit logo must conform to the ’Brand Guidelines, DDI and DD
Logo’ (see above) and should be positioned on the top right hand side of the DDI adjacent to the
SUN (Service User Number).
The DDI must be completed in English however bi-lingual Instructions, e.g. English / Welsh, are
acceptable. The Direct Debit logo can only be used in its approved English format
The standard heading ‘Instruction to your bank or building society to pay Direct Debits’ is
mandatory
Clear instructions to the payer for the return of the form must be shown on the face of the DDI
The authority text to debit the payer’s account must always be printed above the payer’s
signature box
Where the service user is undertaking a Standing Order conversion the instruction to cancel the
Standing Order must be printed as a section at the bottom of the DDI – see Appendices section
13I for DDI template
Service user’s name and address which must be pre-printed
A service user may have a service user’s ‘official use box’ on the DDI, which may be used to
record information not pertinent to the payer’s authority for the Direct Debit application
The SUN must be pre-printed or stamped on the DDI.
Guidance: An additional field may be added to the DDI to capture the signatory’s name e.g. when
obtaining a DDI from a corporate customer the words ‘print name’ may be added either adjacent to
or below the signature line.
____________________________________________
32 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: The Direct Debit Instruction (DDI) is the authority given by the payer to the paying PSP to allow
the service user to collect Direct Debits from the account. The service user’s name must be clearly
shown on the DDI and in field 9 of the Direct Debit record. Refer to section 2A.2 ‘Standard service
user set-up’. See Appendices section 11 for variations to standard service user set-ups.
name and full postal address of the bank or building society of account holding branch
Rule: A clear instruction must be given to the payer to return the completed DDI to the service user
who will lodge the DDI with the payer’s account holding branch.
Rule: Bi-lingual instructions, e.g. English / Welsh, are acceptable, however the DDI information
completed by the payer must be completed in English.
Due to the nature of the storage of AUDDIS DDIs a service user may accept a DDI from the payer
without the payer’s original signature e.g. a scanned copy or jpeg. See section 3C.3 for further
information relating to the storage of DDIs.
The following procedures can also be implemented to ensure the payer and the account details
provided are genuine.
____________________________________________
33 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
In a face to face enquiry service users should ask to see the payer’s cheque book, bank statement
and / or debit card.
Proof of address such as a driving licence or recent utility bill should be requested.
Additional checks:
Ensure a system is in place, which is linked to address details, to intercept duplicate sorting code
and account numbers
Credit checking.
With non-AUDDIS, the DDI is physically forwarded to the payer’s PSP, therefore the primary
responsibility for validation and verification rests with the PSP. However service users are
encouraged to check that the customer is who they say they are and that the details obtained are
correct.
The preferred approach is for service users to preserve a one-to-one relationship between DDIs
signed by the payer, DDIs sent to the paying PSPs and Direct Debits to be collected, refer to section
3B.7. It is recognised the service users may not generate their reference until after the payer has
signed the DDI.
Rule: For AUDDIS only, in the circumstances where the payer has signed a DDI without a reference,
multiple references may be used providing each DD reference is quoted clearly on the advance
notice to the payer detailing which amounts relate to which reference. These must then be lodged as
individual ‘0Ns’ with the paying PSP.
Rule: Use of “DDIC” in the first four characters of the reference is prohibited. This is reserved for PSP
use only.
Rule: Non-AUDDIS service users must ensure that the DDI is correctly completed prior to despatch to
the paying PSP and that the payer has not added any amount or date restrictions to the DDI. DDIs
can only be lodged with the paying PSP by the service user and not directly by the payer.
Rule: A Non-AUDDIS service user using the tear off slip DDI format for additional information must
ensure that this is detached before submission to the paying PSP.
The DDI is not evidence of any contract between the service user and the payer’s PSP.
____________________________________________
34 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Guidance: Most paying PSPs operate a modulus checking facility within their systems which
validates the sort code and account number combination of any DDI and Direct Debit applied to the
payer’s account.
Guidance: It is strongly recommended that service users apply modulus checking and sort code
validation when applying the Direct Debit Instruction to their own system, using an appropriate
product or their own internal systems providing up to date information. This will highlight erroneous
details and enable the service user to correct any invalid information prior to despatch of a non
AUDDIS DDI to the paying PSP or creation of the AUDDIS file for submission via the Bacs service.
Whilst modulus checking and the ISCD or EISCD are available as part of the Bacstel-IP package from
the service user’s Bacs approved software supplier they are also available for use in other
applications direct from https://www.vocalink.com/customer-support/modulus-checking/ and
https://www.vocalink.com/customer-support/eiscd/ respectively.
Guidance: Some PSPs, particularly building societies and former building societies, have accounts
that use non-standard account details therefore service users are also recommended to use the
‘Crediting and Debiting Building Society Accounts’ document to validate sort code and account
number details. This is available from www.bacs.co.uk/CreditingDebitingBuildingSociety.
3A.5 SOFTWARE
Rule: AUDDIS service users must ensure that back office software applications, whether bespoke or
a packaged solution, conforms to the following:
DDIs failing the Bacs service validation checks or returned by the paying PSPs with the
appropriate reason will be advised to the service user via Bacstel-IP and the payment services
website.
____________________________________________
35 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Any Direct Debit collection which is returned unapplied shall be returned via the Automated
Return of Unpaid Direct Debit system (ARUDD).
Rule: In the event that there is any loss or damage caused to the payer as a result of such
amalgamation by a service user, the service user shall be responsible for such loss and damage, and
shall indemnify the paying PSP accordingly.
Rule: Multiple SUNs and multiple core reference choices on a single DDI are only permitted for
AUDDIS service users providing these are quoted on the DDI when the payer signs. Refer to Appendix
section 12 ‘AUDDIS core reference requirements – single versus multiple DDIs’. Any collection to be
made under additional SUNs / core references not quoted on the original DDI requires the service
user to obtain a new DDI from the payer.
____________________________________________
36 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Multiple SUN or reference choices must not be used on the DDI (Except for AUDDIS, see section
3A.7 for further details).
The use of the words ‘account number’ must not be used to describe the service user’s reference
The wording of the Direct Debit Guarantee as detailed in this guide must not be varied in any
way
An AUDDIS service user must not send a paper DDI to the paying PSP
The service user must not amend, add additional SUN(s) or references to the DDI after it has
been signed by the payer.
A Non AUDDIS DDI must not be used for the collection of a single payment (for AUDDIS single
payments see section 3A.8). The service user must not make reference on the DDI of the
proposed collection date and / or that the first collection will include all back collections e.g. ‘The
first Direct Debit will include all amounts which are due up to the date the Instruction is
presented’
The service user must not vary the text or make any addition to the DDI except in the service
user’s ‘official use box’
The service user must not include an address disclosure clause within the DDI e.g. ‘You are
hereby authorised to advise A.N. Company Ltd of my/our address upon request’
The use of adhesive labels on DDIs is not permitted in any form
A non AUDDIS service user must not lodge DDIs which contain only a copy of the payer’s
signature
The DDI must not be lodged with any form or contract required by the service user in respect of
the service / product offered
The service user must not lodge DDIs which are not completed in English however bi-lingual DDIs
are acceptable e.g. English / Welsh
The service user must not print on the DDI itself any details that the payer needs to keep,
including dates and times of collections.
____________________________________________
37 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
The Paperless Direct Debit rules are in addition to the existing Direct Debit Scheme and AUDDIS
rules, as detailed in this guide. If a service user fails to adhere to these rules, they may be removed
from the Direct Debit Scheme as detailed in section 9 of this guide.
Rule: A service user, who has received approval for its documentation and acceptance into the
Paperless Direct Debit environment, may then begin to sign up new payers using one of the scripts in
the Appendices section 14, and must lodge the DDI with the paying PSP via AUDDIS. The service user
must use the approved script applicable to their approved sign-up method. Use of the script will
ensure the payer is given a clear message and is left in no doubt that they have agreed to pay by
Direct Debit and have set up a DDI.
If at any stage the payer does not wish to proceed with Paperless Direct Debit sign-up the service
user has the option to send a paper DDI*.
Rule: In such cases, the Direct Debit must not be set up until a completed paper DDI, duly authorised
by the payer(s), has been received by the service user.
*The service user may choose not to offer the option of a paper DDI. In such instances customers
would not be able to purchase the services offered using Direct Debit as a payment method. This is a
service user’s business decision and is considered as being outside of the Direct Debit Scheme.
The use of a DDI for the collection of a single payment is permitted for AUDDIS service users, see
section 3A.8.
Rule: Where Paperless Direct Debit sign up is being outsourced to a third party e.g. management
administration or call centre, the service user is responsible for the actions of the organisation acting
on its behalf. Guidance: It is highly recommended that the payer’s account details are passed
between the service user and the outsourcing 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.
Rule: Service users wishing to use technologies for paperless sign-up other than those listed below
must first apply to their sponsoring PSP. Approval is at the discretion of Bacs, on behalf of the
sponsor, and may be refused. Seeking such approval may delay the application process.
____________________________________________
38 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
a) Telephone
The payer agrees to sign up for Direct Debit collection over the telephone by providing their account
details to the service user or its agent for completion of the DDI.
b) Internet (electronic)
The payer provides their authority for Direct Debit collections by completing their details on-screen
which are sent to the service user or its agent over the internet e.g. via PC, mobile phone or tablet or
via an App.
c) Face-to-face
The payer in this instance may be offered a paper DDI to sign. If the customer is given the option to
have their details entered immediately into a computer without signing a DDI, the service user will
proceed following the rules and script in this guide. If this information is being sent to a processing
centre it is highly recommended that it is fed electronically without re-keying.
d) Telephone keypad
The payer agrees to sign up for Direct Debit collection and their details are entered by depressing the
telephone keypad following a series of pre-recorded operator directions which must follow the script
in this guide.
e) Interactive TV
Subscribers may access their providers’ online portal via their interactive TV box. The payer provides
their authority for Direct Debit collections by completing their details on-screen which are sent to the
service user or its agent over the internet.
f) Pen-tablet
Service users signing payers onto Direct Debit in a face-to-face situation may use a handheld, mobile
data capture solution to record the customer/contract/DDI information. This is sometimes referred
to as a Hand Held Unit (HHU) or Personal Digital Assistant (PDA). Utility companies, e.g. gas &
electricity providers, have been authorised to utilise this method of sign up in a ‘doorstep’ situation,
in supermarkets, shopping centres or at exhibitions. If the payer agrees to pay by Direct Debit their
details and possibly their signature will be entered directly into the HHU / PDA. Whilst inclusion of a
signature is not technically paperless sign up, because a paper DDI is not being signed the rules
relating to Paperless Direct Debit would apply.
g) Electronic signature
The use of electronic signatures was revised by the Electronic Identification Regulation which came
into force on 1st July 2016 (“Regulation”).
____________________________________________
39 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Under the Regulation, there are three types of electronic signatures: (i) simple (ii) qualified and (iii)
advanced. A simple electronic signature could be a name at the bottom of an email address, ticking “I
agree” on a website or electronic device, a scanned image of signature or the use of a stylus on a
touch screen device. Qualified or advanced signatures are often provided by a third party who
creates the electronic signature on behalf of the signatory using a method of certification. Electronic
signatures can only be provided by individuals and not corporate organisations (corporate
organisations should use an electronic seal).
2. The service user will send the documentation i.e. contract and DDI for e-signature to the
customer. Where it has been identified that more than one person is required to sign this must
be sent to all signatories thus providing an audit trail
4. Customer accesses the link and reviews the documentation online and e-signs
5. The service user then receives the original e-signed documentation (contract and DDI) via
electronic means
6. The service user processes the DDI as usual and lodges with the paying PSP using AUDDIS.
The service user must obtain the payer’s PSP account details including the sort code, account
number and account name
Prior to the origination of any Direct Debits the service user must verify:
Failure to verify these details may result in an increased risk of fraud and as a consequence indemnity
claims being received and the Scheme being brought into disrepute.
Guidance: It is recommended that verification is achieved by using historical data from the service
user’s records or for new customers by using one of the methods included on the list of verification
measures available from the information hub on the Bacs website at
www.bacs.co.uk/DDVerificationMeasures
____________________________________________
40 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Applying modulus checking to validate the payer’s account details enables the service user to correct
any invalid information.
Rule: Service users must validate the payer’s account details by applying ‘modulus checking’ prior to
submission of the 0N.
Guidance: It is however highly recommended that service users validate the payer’s account details by
applying modulus checking during sign up.
Note: Modulus checking determines whether a particular account number could exist at a specified
sorting code. It does not verify that the account details belong to the payer.
Guidance: In addition service users may also use the information details in the ‘Crediting and
Debiting Building Society Accounts’ document to validate the payer’s sort code and account details
where non-standard account details have been provided. This is available from
www.bacs.co.uk/documentlibrary
Guidance: It is strongly recommended that the service user validates sorting codes at point of sale
using an appropriate product, or their own internal systems, providing up to date sorting code
information. The Industry Sorting Code Directory (ISCD) and the Extended Industry Sorting Code
Directory (EISCD) provide this. For more information go to https://www.vocalink.com/customer-
support/eiscd/
____________________________________________
41 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
It is up to the service user to decide how long to store the paper and the method of storage, however
see 3C.3 below.
3C.1 LODGEMENT
0N – for a new DDI, or to re-instate a payer or service user cancelled DDI. Refer to section 6
‘Maintaining Customer Authorities’
0C – to cancel an existing DDI
0S – to convert an existing non-AUDDIS DDI to AUDDIS (only used at conversion time)
0C/0N – by using these as a pair on the same day you can amend a DDI record – for further
information see section 7E.
A new DDI is lodged by submitting a ‘0N’ record to the paying PSP via the Bacs service (day 1)
containing the DDI information. The paying PSP receives the DDI on day 2 and validates the content
and if accepted the DDI will be lodged on day 3. If rejected, the paying PSP will return the record to
the service user on day 3 via the Bacs messaging service. Details of rejected and returned records are
provided on a Bank Returned Direct Debit Instructions report which is available on day 3 or 4 via the
payment services website or via their Bacstel-IP software. An example of the report can be found in
Appendices section 17A.
____________________________________________
42 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
The Bacs service also produces an input report for the DDI file, which details amended / rejected
records resulting from the Bacs service validation. The input report is available to the service user via
the payment services website on day 1 or via their Bacstel-IP software. Refer to section 5A.3 for
further information regarding the input report.
Rule: In joining AUDDIS or Paperless Direct Debit the service user must verify the payer’s identity and
their capacity to authorise Direct Debits to be drawn upon the nominated account as documented in
section 3A.2 and 3B.1. The service user should therefore ensure that it has adequate procedures in
place to authenticate a payer’s identity and their authority to authorise the DDI before submitting to
the paying PSP. This will help to prevent an indemnity claim being raised by the paying PSP where the
payer disputes authorising the DDI.
Guidance: A service user should transmit a DDI to the paying PSP within 10 working days of the
customer signing the DDI, even if the service user does not intend to commence collection
immediately.
Rule: A service user who is unable to transmit the DDI within this timeframe must advise the payer
that the Direct Debit will not be set up on their bank account until XXXX (depending on when the
service user will lodge the DDI)
____________________________________________
43 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: In all circumstances the service user must transmit the DDI no later than 6 months from the
date the DDI was signed. Failure to lodge the DDI within these timescales may result in the DDI being
rejected
Rule: Service users must not collect Direct Debits from a payer’s account earlier than 2 working days
after lodgement of the DDI i.e. if a DDI is lodged with the paying PSP on Monday (day 3) of the Bacs
cycle – then the first Direct Debit can be collected on Wednesday (day 5).
____________________________________________
44 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Valid DDIs are lodged i) Returned DDIs are Service user Paying PSP Direct Debit
against payer’s available to service submits DD receives and applied to
accounts. Invalid DDIs users by way of a collection processes DD payer’s
are returned to service report, available via file to Bacs collection account or
users via the PSP the payment service for file. returned
returned AUDDIS services website or processing unpaid.
service via their
i) Bacs service process ii) Bacstel-IP
paying PSP DDI software on Day 3 /
returns. 4.
ii) Returned DDIs are Note: Service users
available to service can obtain details of
users by way of a the returned DDIs in
report, available via a format to enable
the payment services them to be applied
website or via their directly to service
Bacstel-IP software on users systems.
Day 3 / 4.
iii) Service user to
Note: Service users reconcile.
can obtain details of
the returned DDIs in a
format to enable them
to be applied directly
to service users
systems
iii) Service user to
reconcile.
Storage
Rule: A service user shall store the original DDI or an image thereof. If a service user chooses only to
store an image of the DDI, then it should store it in such a format as shall be admissible in evidence in
any civil or criminal proceedings. The image stored shall be of such size and clarity as to ensure that
____________________________________________
45 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
the essential features of the DDI are clearly visible and legible, including but not limited to the
customer’s signature.
Guidance: The Direct Debit reference should be present on the DDI prior to scanning / archiving.
Failure to include the Direct Debit reference may result in the service user being liable for any Direct
Debit collected under the DDI.
The paying PSPs will store the core reference quoted on the DDI as part of the lodgement process
and will use this to validate Direct Debit collections. The last collection reference or core reference
will be quoted to service users by the paying PSP when advising of amendment / cancellation of the
DDI. Refer to Appendices section 12 for the AUDDIS core reference requirements.
Retrieval
A paying PSP may request a copy of a DDI from time to time by sending the service user a ‘Request
for copy DDI’ form, see Appendices section 18D for an example form. This request may also be made
even if the DDI has been cancelled.
Rule: If the service user is unable to provide a copy within 7 working days from the date of request,
or the DDI is incorrect or fraudulent, it will become liable for any Direct Debit collected under the
DDI. A paying PSP will not lose any rights if it does not remind the service user to provide a copy DDI
after 7 working days.
A paying PSP should include an email address on the request for copy of DDI form to allow the
service user to issue a copy within the 7 working day period. . The confidentiality of the customer’s
sort code and account number must be protected at all times. For security reasons e.g. where sort
code and account number details are included or the reference is a credit card number, service users
may mask part of the personal information.
Liability
Rule: A service user shall be liable in cases where an AUDDIS DDI is signed fraudulently or not in
accordance with the account operating mandate held by a paying PSP. Refer to section 7A.1 ‘Valid
indemnity claims’.
____________________________________________
46 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Service users must not request the payer to lodge the completed DDI direct with the paying PSP
Service users must not accept a DDI with any amendments made by the payer (e.g. amount,
frequency or collection date). If a DDI is accepted with amendments the service user will be liable
for any resulting indemnity claims
The service user must not send a paper DDI to the paying PSP for lodgement under an AUDDIS
SUN
Service users must not request the paying PSP to acknowledge the receipt of a DDI in any format
e.g. by telephone or letter, before the first Direct Debit is presented
Service users must not use ‘DDIC’ in the first four characters of the reference. This is reserved for
PSP use only.
____________________________________________
47 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
This information is then input to the service user’s system and the DDI is dispatched by the service
user by post to the payer’s PSP for lodgement.
Rule: The completed DDI must be lodged by the service user direct with the payer’s account holding
branch or dedicated processing centre. Service users must lodge the DDI within 6 months from the
date the DDI was signed by the payer before collections may commence.
A list of paying PSPs that process Non-AUDDIS DDIs centrally together with their address details can
be found on the Bacs website at www.bacs.co.uk/CentralisedNonAUDDISDDIS.
Guidance: It is considered best practice for service users to lodge the DDI immediately.
Each DDI will be registered by the paying PSP as a single authority given by the payer for the
collection of Direct Debits by the service user. This is recognised by the paying PSP as a DDI marked
against the service user’s SUN and any reference allocated by the service user
The DDI must not have multiple SUNs or reference choices (except for AUDDIS, see section 3B.7 for
further details).
The DDI will be returned to the service user immediately but no later than 3 working days from
date of receipt by the paying PSP
The paying PSP will indicate on the returned DDI that lodgement has been refused e.g. unable to
accept Direct Debit against account
PSPs’ reserve the right to refuse lodgement of a DDI without giving a reason for doing so. In such
a case the DDI will be returned to the service user marked ‘lodgement refused’
When a service user receives a returned DDI which has been rejected, the service user must
contact the payer to arrange an alternative payment method
Some paying PSPs process DDIs centrally. In this event the service user may receive a covering
‘lodgement referred or rejected’ form for a number of rejected DDIs. The reason for refusal may
be indicated either on each DDI or on the form, see /Appendices section 18A.
____________________________________________
48 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: All service users are required to use a core reference of a minimum of 6 alpha-numeric
uppercase characters on the DDI. Refer to Appendices section 12A. However, it is recognised that
service users may not generate their reference until after the payer has signed the DDI. In these
circumstances, where the payer has signed a DDI without a reference, only one reference may be
used. The service user must include this reference on all Direct Debits (field 10 of the Bacs service
data record).
Rule: Use of ‘DDIC’ in the first four characters of the reference is prohibited. This is reserved for PSP
use only.
Paying PSPs have the right to refuse completed DDIs without giving a reason. In particular they
will generally refuse completed DDIs which do not comply with the rules set out in this guide
Paying PSPs may confirm payer details to a service user but are not under any obligation to do so
or to disclose any additional information about the DDI or payer’s PSP details to service users.
Any information provided is given in good faith but neither by giving such information nor by
declining to give information does the paying PSP assume any responsibility to the service user.
See Appendices section 18A for example of a PSP bulk DDI lodgement referred / rejected form.
____________________________________________
49 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
50 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: A service user must enter the number of days advance notice which will be given to the payer
in respect of payments to be collected under the DDI.
Rule: Service users who print the DDI in a publication and are not able to include the Direct Debit
Guarantee due to the constraints of available print space must issue the Guarantee to the payer with
the advance notice or other correspondence issued in respect of the application.
Rule: Paperless Direct Debit service users must provide an explanation of the Direct Debit Guarantee
during sign up of the Direct Debit Instruction; however the Guarantee must be provided in full if the
payer requests it. In all cases a copy of the Guarantee must be provided with the confirmation of sign
up.
Rule: All service users must use the Direct Debit Guarantee as illustrated below. The service user
must not vary the wording in any way.
The paying PSP must meet the terms of the Direct Debit Guarantee.
____________________________________________
51 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
52 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
4B ADVANCE NOTICE
Introduction
Rule: Advance notice is the method by which service users give notice to the payer before the first
Direct Debit is collected and following any changes to the Direct Debit collection in respect of
amount, Direct Debit due date and / or frequency. The advance notice must be a clear and
unambiguous personalised advice and must be identified as such at first glance by the payer. Refer to
Appendices section 19A for an example advance notice.
Rule: Where the payer is paying on behalf of another person or party, the advance notice must be
issued to the Direct Debit payer, i.e. the person who signed the DDI. The service user may also, at its
own discretion, and subject to proper consent having been received from the payer as required by
the Data Protection Act 2018, advise the third party.
Rule: Written and electronic forms of the advance notice must be approved by the service user’s
sponsor before it can be issued by the service user.
Total amount of Direct Debit to be applied to the payer’s account. If this is an amalgamation of
more than one collection (where permitted) the amount of each collection forming part of the
Direct Debit must also be shown
Direct Debit due date (include date, month and year)
Frequency of Direct Debit collection, where an advance notice is not issued for each collection or
where an advance schedule of specific dates is not issued
Direct Debit reference.
Guidance: For security reasons e.g. where the reference is a credit card number, service users
may mask part of the reference. When doing so it is considered best practice for the service user
to advise the payer where they may locate the full reference e.g. on their credit card.
Advance notice period (mandatory for initial advance notification but optional for subsequent
notifications)
NB: The advance notice period is not a mandatory requirement for Paperless Direct Debit service
users as this will have already been advised to the payer within the script during the sign-up
process. Refer to Appendices section 14 for suggested layout of Paperless Direct Debit sign-up
scripts.
Service user name and contact details - telephone number or email address
Service User Number (SUN) (optional).
Rule: If the collection details are altered in any way a new advance notice must be sent to the payer.
____________________________________________
53 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: Advance notice must be given in advance of the payer’s account being debited.
Example:
Service users advance notice period is 10 working days. Allowing for postal time, and for the purpose
of this example, the day the advance notice is received by the payer is treated as Day 0.
The same applies to advance notice received electronically. Regardless of the time of day the
advance notice is available to the payer that day is treated as Day 0.
Rule: Service users must collect the Direct Debit on or within 3 working days after the specified due
date as advised to the payer on the advance notice.
Rule: Collections must not be applied to the customer’s account before the date specified in the
advance notice.
Rule: Should the service user fail to collect the Direct Debit as specified, further notification must be
given to the payer of the new collection date.
Rule: Notification must be issued to the payer sufficiently early but not too early such that the payer
may overlook the change. A copy of the Direct Debit Guarantee showing the revised advance notice
period must also be issued.
____________________________________________
54 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Guidance: The preferred practice is to avoid multiple collections / amalgamations and to use the
one SUN, one contract procedure.
Written notification
Guidance: A service user may give written notification to the payer within the following
documentation:
*NB – Rule these must clearly display that collection is by Direct Debit, the amount to be debited and
the debit due date, e.g. “This invoice is for information purposes only. The amount due will be
collected by Direct Debit on or immediately after …”
Electronic notification
Guidance: Electronic notification may be given by the service user on any form of electronic
hardware.
Rule: Use of such notification can be used only with prior advisement to the payer. Provision of
notification by a method that is not included in the list below should first be discussed with your
sponsor.
Email – where the payer has provided an email address and has been advised that this method of
notification will be used
SMS (text message) – where the payer has provided a mobile number and has been advised that
this method of notification will be used. This type of notification may not suit all types of service
user but may be acceptable when direct action by the payer requires the service user to initiate a
specific debit on the payers account under an existing DDI e.g. mobile phone top-up. SMS may
not be suitable for use when providing the initial advance notice due to restrictions in the
number of characters allowed, however it may be acceptable for subsequent notifications
____________________________________________
55 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Via a secure website – where the payer has provided an email address or mobile number and has
been advised that this method of notification will be used. The service user may provide details
of a payer’s Direct Debit collection(s) via a secure website.
Rule: 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, that the details are available to view.
Oral notification
Rule: If the service user wishes to provide the payer with details of a series of future dated
collections this must be provided in written or electronic form i.e. a schedule.
Guidance: Although the preferred method of advance notice is in written format it is accepted that in
some instances, service users may find it necessary to give oral notification to the payer. Service
users who do so must also accept the risk of a subsequent indemnity claim by the paying PSP on
behalf of the payer who may dispute the Direct Debit. Refer to section 7A ‘Indemnity claims’.
Guidance: Paying PSPs cannot accept a voice recording transcript as proof of advance notice.
However, this may be used by the service user when in discussion with the payer.
CD / Cassette
Service users may provide advance notice to blind or visually impaired payers on CD / Cassette.
Exceptional dispensation
Exceptionally, advance notice may not be required when direct action by the payer requires the
service user to initiate a specific debit on their PSP account under an existing DDI (one off collections
are not allowed by the Scheme except under AUDDIS, refer to section 3B.8 ‘one- off Direct Debits’).
Possible situations could be:
Where a payer requests the service user to initiate a specific collection on their account under an
existing DDI, for instance the payer wishes to make an additional mortgage payment over and
above the normal monthly payments, advance notice may be given by way of confirmation of the
payer’s instruction at the time of the request, and the normal advance notice period will not
apply. This procedure is only permitted where the additional collection arises in the context of an
existing agreement
a written request received by the service user from the payer
____________________________________________
56 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
a request by the payer to the service user by means other than in writing but providing an audit
trail.
Rule: If any doubt exists guidance of the sponsor must be obtained by the service user before
establishing an arrangement dispensing with the advance notice.
Oral notification of a future schedule of Direct Debit collections, where the amount and / or
collection date is subject to change, is not sufficient. Such information must be given to the payer
in written or electronic form
Announcement of any change in a professional journal or other publication is not adequate,
without a separate letter addressed to the payer. Clubs or professional institutions must issue
each member with a separate notice of any change in the rate of subscription or the date of
collection in accordance with advance notice requirements prior to that change taking place
Advance notice must not be sent with material which might have the appearance of ‘junk mail’
and thus risk being discarded before being read. If other (non-related) information is sent, to
qualify as ‘advance notice’ the statement of collection changes must:
- Be given precedence over other material
- Appear under the following prominent heading: ‘advance notice of Direct Debit’.
Direct Debits cannot be collected before the date specifically detailed on the advance notice. This
applies whether or not the specified date is a working day
Service users must not use ‘advance notice’ as a mechanism for selling additional products or
services in such a way that the payer has to dispute the advance notice issued, i.e. opt out, to
avoid provision of the additional product or service and the associated increase in charge or
premium
Service users must not provide details of advance notice on a secure website, without advising
the payer of its availability by their usual method of notification e.g. email / text / letter.
____________________________________________
57 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Service users must confirm the Direct Debit set-up to the payer
Confirmation must be followed by or must include (see below) the standard advance notice as
described in section 4B
Confirmation and confirmation including the advance notice must include the mandatory items
listed in sections 4C.1 and 4C.2 respectively
Confirmation is generally expected to be provided in a letter (examples of which can be found in
Appendices sections 19C and 19D respectively). It can however be delivered by a method
previously advised to the payer i.e. electronically, or in the case of blind or visually impaired
payers on a CD / Cassette
If the first collection is being made within one month from sign up the service user may issue the
confirmation and the advance notice together, which must be received by the payer in line with
the service user’s advance notice period. If the first collection is later than one month from sign
up or the confirmation is being provided separately from the advance notice the confirmation
must be provided within 3 working days of sign up
The payer must be able to store and retrieve the communication(s) for future reference
The confidentiality of the customer’s sort code and account number must be protected at all
times
Guidance: For security reasons service users may mask part of the account number leaving sufficient
characters to enable the payer to recognise it e.g. by masking the first four digits. Similarly the
service user may mask part of the reference e.g. where the reference is a credit card number. See
section 4B.1.
The confirmation whether provided in paper or electronic form must include the following
information. See Appendices section 19C for example layout.
____________________________________________
58 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Reference to be used on Direct Debit collections, which may appear on the payer’s PSP
statement of account (subject to any masking – see section 4B.1)
The confirmation incorporating advance notice, whether provided in paper or electronic form, must
include the following information. See Appendices section 19D for example layout.
A heading advising confirmation of the set-up of the Direct Debit Instruction and future payment
schedule
Amount to be debited
Reference to be used on Direct Debit collections, which may appear on the payer’s PSP
statement of account. (subject to any masking – see section 4B.1)
*Where an advance notice is issued for each collection or where a schedule of specific dates is
issued, the frequency including day/date to be debited is not required.
____________________________________________
59 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
60 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
The collection process starts when the DDI has been successfully lodged with the paying PSP.
5A.1 METHOD
Rule: In order to collect Direct Debits the service user must maintain up-to-date records and
processes designed to ensure that the collection is made accurately and in a timely manner.
Rule: A service user must maintain information for all its payer’s current records. This should cover
information in respect of:
Failure to do this may result in a higher proportion of unpaid or unapplied debits, indemnity claims
and will also affect customer service.
Management administration
A service user may contract an organisation to manage its Direct Debit application.
Rule: The service user takes full responsibility for the actions of the other organisation operating on
its behalf. These actions include:
corresponding with the payer, receipt of completed DDIs and lodgement with the paying PSPs
management of returned, amended and cancelled DDIs
management of collection files sent via the Bacs service and the collection of Direct Debit records
on the collection due date(s). Reconciliation of processed, rejected and returned items
applying the collected funds to the service user’s account.
Modulus checking* – Most paying PSPs operate a modulus checking facility within their systems
which checks the sort code and account number combination. This information is also available to
____________________________________________
61 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
service users and may be used to check the payer’s account details before collections are sent via
Bacs.
Industry Sorting Code Directory* – The ISCD / EISCD is a file that contains all centrally held
information about the PSP branches and offices that are connected to any of the UK clearing
systems. This information may be used to check the payer’s sort code.
Crediting and debiting building society accounts – A service user’s guide – For service users who
apply Direct Debits to accounts with non-standard account details, a register is maintained which
details the correct sort code and account number combinations. This information is available to
service users and may be used to check the payer’s account details.
* Whilst modulus checking and the ISCD or EISCD are available as part of the Bacstel-IP package from
the service user’s Bacs approved software supplier they are also available for use in other
applications direct from https://www.vocalink.com/customer-support/modulus-checking/ and
https://www.vocalink.com/customer-support/eiscd/respectively.
5A.1C REFERENCE
Rule: All new service users are required to use a core reference of a minimum of 6 alpha-numeric,
uppercase characters on the DDI. The service user must include this reference on all Direct Debits
(field 10) of the Bacs data record.
Guidance: It is strongly recommended that service users adopt the preferred best practice of a one
contract – one DDI approach with a reference identifying both the DDI and the Direct Debit
collection. Using this practice will eliminate risk of confusion by all parties concerned.
The service user will extract all the Direct Debits due for collection from its computer records and
generate an input file which is submitted to the Bacs service for processing.
Rule: This file must be submitted at least 2 working days before the Direct Debit due date, see Bacs
cycle.
____________________________________________
62 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
The function of the Bacs service is to process automated data containing records of Direct Debits
written to a standard format, for onward transmission to destination PSP accounts.
Service user transmits automated All data accepted is processed (the Direct Debits and associated contra
data in accordance with the working day before entry day). entries are debited / credited to
timetable laid down in the Service destination PSP accounts on this
user guide – Bacstel-IP. day.
Rule: Direct Debits must be sent to the payer’s sort code and account number and each Direct Debit
record must be submitted with the appropriate transaction code. The transaction code indicates the
status of the Direct Debit collection, as detailed below:
Transaction code 01 – For first collections, i.e. the first Direct Debit originated following the
receipt at the payer’s PSP branch of a new DDI, transferred DDI or where an existing DDI has
been reinstated.
With effect from 1 January 1998, the successful processing of a Direct Debit with transaction code 01
(in respect of a first payment on a new DDI) should be construed by the service user that the paying
PSP holds a DDI. This does not apply to AUDDIS service users. If a Direct Debit using transaction code
01 is returned unpaid for any reason except for ‘refer to payer’ it may be presented again, providing
it is appropriate to do so.
Rule: In the above case transaction code 01 must be used and a new advance notice sent to the
payer. However, if a Direct Debit using transaction code 01 is returned unpaid ‘refer to payer’ it must
only be represented with transaction code 18.
Under these circumstances, if the paying PSP subsequently raises an indemnity claim for the reason
’payer disputes having given authority’ i.e. no instruction held, a service user is still protected and will
be able to raise a challenge, subject to the criteria and timescales in section 7A.5.
Transaction code 17 – For the collection of all Direct Debit payments, this code is used to indicate
the collection of a standard Direct Debit, i.e. not a first, final or re-presented Direct Debit
Transaction code 18 – For re-presentations. A re-presentation must always be submitted with
transaction code 18
Transaction code 19 – For final collections.
Paying PSPs will mark the Direct Debit Instruction as expired when a service user uses transaction
code 19.
Rule: The use of these transaction codes is mandatory and service users must provide for them in
their systems design.
____________________________________________
63 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: The payer’s name (field 11 of the Bacs data record) must quote the payer’s account name. This
may not necessarily be the service user’s customer i.e. a third party is paying on the service user
customer’s behalf.
It is the service user’s responsibility to ensure collection is made on the due date, i.e. the date
advised to the payer within the advance notice. Collection must be made on or within 3 working days
after the due date. Should the service user fail to collect the Direct Debit as specified further
notification must be given to the payer, quoting the new collection date. Refer to section 4B
‘Advance notice’.
Where the service user has collected more than intended / advised to the payer the service user
should confirm in writing direct with the payer the appropriate refund arrangements. Refer to
section 7B ‘Error recovery’.
Guidance: It is advisable for service users to offer a choice of collection dates to its customers. This
would offer budgeting options and may reduce the number of unpaid Direct Debits returned by the
paying PSPs due to lack of funds.
Rule: This must be in the name of the service user and held by the sponsor.
Rule: All Direct Debits claimed by a service user must be collected in the same name that appears on
the DDI signed by the payer.
Rule: The description in field 9 of the Direct Debit collection provided for the service user’s name is
restricted to 18 characters. When abbreviation of the name is necessary, it must be a recognisable
form of the name quoted in the DDI, as this may appear in PSP records, including the payer’s PSP
statement of account. Refer to section 2A.2 ‘Standard service user set-up’ and Appendices section 11
‘Variations from the standard set-up’.
Paying PSPs reserve the right to amend the service user’s name on the Direct Debit record if the
name quoted is not recognisable, but are under no obligation to do so.
These facilities are detailed in the Service user guide – Bacstel-IP available from
www.bacs.co.uk/BacstelIPUserGuide. There are a number of facilities available to the sponsors and
service users which may be used to monitor / control the service user’s input, these include:
____________________________________________
64 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Sponsor control
Account limit – The sponsors may apply a limit against a service user’s nominated account.
Account overlimit referrals are reported to the service user’s sponsor who must give their
authority to process or extract the submission if appropriate.
Payment transaction limit – The maximum individual payment transaction limit is £20m.The
sponsors will monitor service users that break down collections over £20 million into a number of
lower value payments.
All Bacs service generated reports are available to the service user via the payment services website
or via their Bacstel-IP software. See Appendices section 17 for examples of the Bacs service
messaging reports. Details of all reports are included in the Service User Guide - Bacstel-IP available
from www.bacs.co.uk.
The service user is responsible for reconciliation of Direct Debit / DDIs processed, rejected, returned,
amended and cancelled.
____________________________________________
65 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
5B FAILED COLLECTIONS
5B.1 UNPAID DIRECT DEBITS
Introduction
When a Direct Debit fails i.e. it is not paid by the paying PSP, it will be returned unpaid to the service
user via the Bacs service using ARUDD (Automated Return of Unpaid Direct Debit). See Appendices
section 17C for example report. The Bacs service accepts returns if they match original Direct Debits
submitted under the current processing cycle and which are received on day 3 / 4. Service users
should seek advice from their sponsor in the event of any queries.
5B.1B TIMESCALES
Unpaid Direct Debits are returned by the paying PSPs via the Automated Return of Unpaid Direct
Debit service (ARUDD) and returned items will be debited to the service user’s account on day 5 or in
exceptional circumstances day 6 of the cycle, see unpaid cycle in section 5B.1C. Each returned item
will include the original transaction code and the reason for return. A list of reason codes and further
information on how individual codes should be dealt with, are detailed in Appendices section 16.A.
Rule: Service users must check the ARUDD report and take the appropriate action in respect of any
unpaid Direct Debits.
____________________________________________
66 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Paying PSPs’ returned unpaid Direct Debits are processed electronically via the Bacs service. Service
users wishing to receive details of unpaid Direct Debits in automated form should seek the advice of
their sponsor(s).
ARUDD reports are produced for each service user. Separate sections are provided for unpaids
returned on day 3 and day 4 respectively, with further sub-sections for each nominated account
involved. See Appendices section 17.C for an example ARUDD report.
____________________________________________
67 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: Re-presentation must only occur when the service user may reasonably assume that the
conditions necessary for collection will be met.
5C.2 APPLICATION
Rule: An unpaid Direct Debit must only be re-presented by the service user if the following criteria
are met:
the amount of the re-presented Direct Debit is the same as that originally dishonoured
it is identified by the use of transaction code 18.
Rule: If the final Direct Debit, in a series of payments, (transaction code 19) is returned unpaid by the
paying PSP, the service user must re-present the Direct Debit with transaction code 18. If it is re-
presented with a transaction code of 01, 17 or 19 it may not be accepted. Refer to section 5A.2B
‘Transactions codes’.
5C.3 TIMESCALES
Re-presentation of an unpaid Direct Debit may continue for one month from the date on which first
presentation was made.
Rule: If payment has not been made within this period, the service user must make other
arrangements directly with the payer for collecting the amount due or give advance notice of the
new collection date and amount. Refer to section 4B ‘Advance notice’.
Guidance:
If a Direct Debit is returned unpaid by the paying PSP it is recommended that the service user
should liaise with the payer to offer a new collection date. A service user should give at least 5
working days’ notice to the payer of the new collection date
If the Direct Debit has been returned for the reason ‘refer to payer’ then additional advance
notice is not mandatory but is recommended.
____________________________________________
68 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
69 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
branch mergers
where the payer’s sort code and / or account number has not been correctly detailed on the
Direct Debit, the paying PSP may apply the Direct Debit and provide advice of the correct details
to the service user via ADDACS
where the payer has requested their paying PSP to re-instate a DDI (permitted up to 2 months
following cancellation) a re-instatement advice (ADDACS code R) will be generated by the paying
PSP.
Rule: In such cases the service user must confirm this action with the payer and issue an advance
notice.
Payer generated
Advice of cancellation from the payer to the service user.
Rule: Service users must apply DDI amendments and cancellations within 3 working days of the date
the advices are available or as specified by the payer thus ensuring that future Direct Debit
collections are submitted with the correct information.
Guidance: It is strongly recommended that the changes are applied immediately to avoid the risk of
misdirected or failed collections.
Guidance: Where a payer has given advice to the service user to cancel the contract this will normally
be taken as a cancellation advice for the DDI, however, where the payer owes outstanding funds to
the service user in respect of the contract the service user may, with the payer’s agreement,
continue to use Direct Debit as the method of collection. Refer to section 4B.4 ‘Notification of
outstanding funds – contract cancelled’.
____________________________________________
70 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
using ADDACS. Paying PSPs send their DDI amendments / cancellations via the Bacs service who
provide this information to the service user as a report, which is available to download via the
payment services website or via Bacstel-IP software. See Appendices section 17B for an example
report. Advice may also be given in the form of an unpaid Direct Debit generated via the ARUDD
process with the appropriate reason code. Refer to Appendices section 16 for Direct Debit reason
codes and their meanings.
Additionally the Bacs service will provide advice of the new sort code and / or account number using
ADDACS where the status of the paying branch has changed (e.g. branch closure / merger) and the
Direct Debit is addressed to the old details.
Rule: Service users must action ADDACS advices within 3 working days of the advices being available
to download.
Guidance: It is strongly recommended that the changes are applied immediately they are received to
avoid the risk of misdirected or failed collections.
Rule: Service users must ensure that an audit trail of ADDACS advices is kept in order to respond to
indemnity claims raised.
Should there be a dispute over whether an advice was issued, the paying PSP will provide a copy of
the ADDACS record or proof that an ADDACS advice has been sent.
Amendments to the DDI may arise as a result of any of the reason codes shown in the ADDACS table
below
2 Payer deceased
B Account closed
E Instruction amended
Refer to Appendices section 16 ‘Direct Debit reason codes and their meanings’ for information on
how individual codes should be dealt with.
____________________________________________
71 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
NB – A service user must note that its payer’s DDI can be terminated without their knowledge e.g.
the appointment of a liquidator. This will involve statutory publicity thus providing constructive
notice.
Paying PSPs will progress the payer’s instruction to amend / cancel a DDI. Failure to do so
immediately could result in liability for the paying PSP. The potential liability is immediate and will
relate to the period outstanding between the PSP receiving the payer’s instruction to amend / cancel
the DDI and the PSP actioning that instruction.
Therefore if a debit is paid against the payer’s account before the cancellation advice is sent to the
service user the paying PSP would be liable. Paying PSPs will accept transaction code 19 as
notification of the expiry of the DDI. Refer to section 5A.2B ‘Transaction codes’.
Rule: Where there is a change to the status of the service user which would lead to changes to a DDI
e.g. reference / SUN / legal entity, the service user must obtain and lodge new DDIs with the paying
PSPs, however subject to specific criteria and safeguards, the Bulk Change Process may be used. See
section 7E for further information regarding the Bulk Change Process.
Rule: Service users must refer to their sponsor if they wish to make such arrangements.
The payer may wish to advise the service user direct by written or electronic form or orally of a
cancellation to the DDI.
Rule: Where a payer has given advice to the service user to cancel the contract, this will be taken as a
cancellation advice for the DDI. If the payer owes outstanding funds to the service user in respect of
the contract, the service user must clarify the collection method to be used to collect these
outstanding funds. Refer to section 4B.4 ‘notification of outstanding funds – contract cancelled’.
Rule: The service user must apply the changes and advise the payer to notify their paying PSP. This
will ensure that all parties involved are informed of the cancellation.
NB – If notification has been accepted by the service user, the service user may subsequently be
liable to an indemnity claim if the payer disputes giving authority to amend / cancel a DDI.
Rule: A service user reinstating a cancelled DDI must be able to provide, within 7 working days, a
copy of the new authority dated after the date of the cancellation, should they be requested to do so
____________________________________________
72 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
by the paying PSP. The customer’s authority, dated after the cancellation, will provide evidence to
the paying PSP of the payer’s consent to reinstatement, if collection is disputed. A service user failing
to do so becomes liable for Direct Debits already submitted under that DDI.
The paying PSP will confirm with the payer that the evidence provided by the service user is correct.
Acceptable forms of evidence are:
Letter from the payer confirming to the service user that the cancelled DDI may be
reinstated.
Rule: Where a payer has given advice to the service user to cancel the contract, this will be taken as a
cancellation advice for the DDI. If the payer owes outstanding funds to the service user in respect of
the contract, the service user must clarify the collection method to be used to collect these
outstanding funds. Refer to section 4B.4 ‘notification of outstanding funds – contract cancelled’.
There are two options available to the payer within CASS, dependent upon their new paying PSP
offering: –
Full Account Switch Service - enables a current account to be switched seamlessly from one
PSP account to another PSP account in a guaranteed period of seven working days. The
service includes redirection of the Direct Debits and other payment arrangements from the
old PSP to the new PSP and the balance transfer and closure of the account at the old PSP
Partial Account Switch Service - is provided for customers that may wish to retain their
account with the old PSP. The new PSP will agree with their customer which payment
arrangements are to be transferred; this service does not include the redirection of
payments and there is no guaranteed timescale for completion of the switch.
For each change to a DDI the new PSP will inform the service user via an ADDACS reason code 3
advice containing both the old and the new PSP details. For an example ADDACS report see
Appendices section 17.B and Appendices section 16B for reason codes and their meanings.
Rule: As detailed above, Service users must action ADDACS advices within 3 working days of the
advices being available to download.
Guidance: It is strongly recommended that the changes are applied immediately they are received to
avoid the risk of misdirected or failed collections.
____________________________________________
73 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
The key difference between the full and partial services from a service user perspective is the
automatic redirection of payments from the old account to the new account. This does not occur
when the customer has elected to undertake a partial switch.
Service users are unable to identify from an ADDACS message whether the customer has undertaken
a full or a partial switch and therefore it is vital that ADDACS advices are actioned to avoid the risk of
failed collections or collections being applied to the wrong account. See CASS related lodgement
below.
Full Service only – should a service user fail to update its records in accordance with the above rules
notification will be issued electronically to the service user via an ADDACS reason code 3 advice
containing both the old and the new PSP details each time a collection is directed to the old PSP.
Service users receiving multiple ADDACS advices reflecting the same change will be monitored and
will be regarded as non-compliant with the Direct Debit Scheme Rules. (Refer to sections 8A.1G and
9B).
Service users that have already created their payment file or that receive an ADDACS advice close to
the next collection date are encouraged to collect the next due payment from the old PSP as the
redirection service with supports the Full switch will result in the collection reaching the new PSP.
Service users need not contact the payer to request that a payment is effected in another way unless
or until the collection of the payment fails. Should the payment fail service users should provide
notification to the payer as soon as possible quoting the new collection date. See section 5A.1D.
Guidance: The Regulators remain keen to ensure that customers are ‘held harmless’ for errors
occurring when changing their PSP account. As such service users are encouraged not to charge their
customers or register adverse credit data in the event of problems arising as a result of the account
switching process.
____________________________________________
74 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Action ADDACS advices within 3 working days of the advice being available to download
All AUDDIS service users only - send a ‘0N’ transaction using the new PSP details within 10
working days of receipt of the ADDACS advice
Collect the first Direct Debit following transfer using transaction code 01
Ensure that they keep an audit trail of ADDACS code 3 advices in order to respond to indemnity
claims raised
Issue a further notification to the payer of the new collection date if the transfer of a Direct Debit
Instruction delays the payer’s Direct Debit collection by more than 3 working days from that
specified in the advance notice
Not send a ‘0C’ to the old PSP upon receipt of an ADDACS code 3 advice quoting both the old and
new account details
Disregard any ADDACS advice received from the old PSP in respect of any DDIs included in the
transfer.
Guidance: There may be occasions when, (see examples below) following the generation of an
ADDACS advice, the service user may wish to speak to the payer’s new PSP or the payer’s new PSP
may wish to speak to the service user to query or check the details contained in the advice.
*Discussions should be restricted to information pertinent to the Direct Debit:
Query cancellation of a DDI – discussion should be restricted to the date of cancellation, the
reference and the cancellation reason code, because this will be shown on the ADDACS advice
Query amended DDI – discussion should be restricted to the date of amendment, the reference,
and the reason code used, because this will be shown on the ADDACS advice
Query transfer of a DDI – discussion should be restricted to the date of transfer, the reference,
and the reason code, because this will be shown on the ADDACS advice.
Prohibited practices
Rule: The following is not permissible:
Service users must not request the payer to sign a new DDI upon receipt of a transfer advice
Service users must not send a ‘0C’ transaction code to the old PSP upon receipt of an ADDACS
code 3 advice quoting both the old and new PSP account details.
____________________________________________
75 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
6A.5 DORMANCY
All paying PSPs hold details of payer DDIs on file for a minimum period of 13 months from
lodgement of the DDI in the event of no collections or from the date of the last collection i.e. length
of time in calendar months after which a paying PSP will drop details of a DDI because no Direct
Debit has been collected.
Rule: A service user requiring all DDIs under a SUN to be held for more than 13 months, from either
lodgement or last collection, must apply to its sponsor.
Requests will be reviewed to ensure that the service user, in its normal course of business, does
require a dormancy period greater than 13 months. The sponsor will advise the paying PSPs of a
service user’s extended dormancy period. Rule: Where a service user has agreed to suspend
collection of Direct Debits for a period which exceeds the service user’s dormancy period, the service
user must obtain a new DDI from the payer and lodge it with the paying PSP.
Rule: If a service user does not present a Direct Debit against a DDI for 13 months, and has not
requested an extended dormancy period, any subsequent Direct Debit must be preceded by a new
DDI, otherwise the Direct Debit may be returned ‘no instruction’.
____________________________________________
76 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
77 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
7A INDEMNITY CLAIMS
Introduction
Paying PSPs will refund the payer in the event of an error in the payment of a Direct Debit by the
service user. Paying PSPs use the indemnity claim process to recover the refunded payment from the
service user. An indemnity claim can only be raised for the full amount of the original Direct Debit
payment.
Rule: Subject to the exceptions detailed in section 7A.6 all indemnity claims will be raised using the
automated process. All indemnity claims, whether received via the automated system or the paper
exceptions process, must be settled within 14 working days of the date of the claim.
Rule: Service users must take no action to settle indemnity claims received via the automated route
as settlement will occur automatically 14 working days after the indemnity claim was submitted. See
section 7A.4 for further details.
The service user may have the right to raise a Counter Claim against an indemnity claim (such
Counter Claim means any ‘challenge’ made through the challenge process under these Guides and
Rules) subject to the criteria in 7A.1 below and the timescales as detailed in section 7A.5A.
If, on receipt of an indemnity claim, the service user disagrees as to the validity of the claim and the
issue falls outside the challenge criteria, the service user must pursue the matter direct with the
payer.
Direct Debit is the method of collecting payments and the PSPs are not responsible for any
underlying contract between the service user and the payer.
Paying PSPs will action the payer’s instruction to amend / cancel a DDI. Failure to progress a
cancellation immediately will result in the paying PSP being liable for any Direct Debits paid in error
under the cancelled DDI unless the payer has already notified the service user.
Rule: Where the service user has received an ADDACS advice from the paying PSP amending /
cancelling the DDI, this must be processed within 3 working days of the date the advice is available.
Refer to section 6A.1 ‘Paying PSP generated advices’.
Guidance: Service users are strongly encouraged to action such advices immediately.
____________________________________________
78 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Where a Direct Debit collection quoting the old details is already in transit or if a Direct Debit is
issued with the old details after the date of the cancellation advice, service users should be aware
that the Direct Debit may be the subject of an indemnity claim.
In the case of an unresolved dispute in respect of an amendment / cancellation advice issued by the
paying PSP to the service user, the paying PSP will provide proof that the advice was issued.
Rule: A valid indemnity claim must meet one of the criteria listed in the following table. The table
below shows where a valid challenge may be raised.
____________________________________________
79 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Valid Indemnity Claim reasons Valid Challenge reasons and, where applicable, what supporting
documentary evidence is required
(see also section 7A.5)
1) The amount and / or date of the Direct Debit differ All service users – where the service user can produce either a copy
from the advance notice issued to the payer by the of the advance notice or a copy of a contract signed by the payer
service user detailing the amounts to be collected and the collection dates.
2) No advance notice was received by the payer All service users - where the service user can produce either a copy
of a contract signed by the payer which includes the advance notice,
or an email / text sent to the payer which includes the advance
notice. Where the email / text refers the payer to a secure website
the service user must include evidence of the advance notice e.g.
screen print from the website.
3) DDI cancellation by the paying PSP. Where there is All service users - where the paying PSP fails to send a cancellation
proof that an ADDACS cancellation advice has been advice to the service user on or before the date the debit was
sent by the paying PSP to the service user on or presented against the payer’s account. Or in the case of a paper
before the debiting day indemnity claim, the paying PSP fails to include the date of
cancellation within the form
4) Where the payer has cancelled the DDI direct with None
the service user, notwithstanding the fact that the
payer may not have cancelled the DDI with the PSP
5) A payer disputes having given authority. AUDDIS service users may provide one or more of the following as
evidence:
The paying PSP may request a copy of the payer’s A valid instruction e.g. one retained by the service user in accordance
authority before refunding the payer (this must be with the AUDDIS requirements.
provided in accordance with the AUDDIS requirements), Evidence of a contract signed by the payer that specifically
or they may contact the service user for further references payment by Direct Debit
____________________________________________
80 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
information, although there is no requirement for them Evidence of a contract that specifically references payment by Direct
to do so. Debit – this need not be signed by the payer where the payer does
not dispute the existence of the contract, merely the payment
method.
7) An indemnity claim raised at the service user’s All service users - where the indemnity claim for reason code 7
request. The request will not be accepted by the (indemnity claim raised at service user’s request) is disputed. The
paying PSP until after payment has been debited to paying PSP is required to uphold the challenge if the fax / email
the payer’s account. No action will be taken on any provided by the service user cannot be produced.
request until it has been confirmed in writing to the
____________________________________________
81 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
8) Payer does not recognise the service user collecting AUDDIS service users – may provide one or more of the following as
Direct Debit. Where the paying PSP is unable to evidence:
identify and consequently action a payer’s request to A valid instruction e.g. one retained by the service user in accordance
cancel a DDI as a result of the service user using one with the AUDDIS requirements
of the set-up exceptions in respect of trading names A contract signed by the payer that specifically references payment
or facilities management. Refer to section 2A.3 and by Direct Debit
Appendices section 11 A contract that specifically references payment by Direct Debit – this
need not be signed by the payer where the payer does not dispute
the existence of the contract, merely the payment method
Evidence showing that the payer has confirmed receipt of a nominal
amount into their account by provision of an associated reference to
the service user
____________________________________________
82 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
None All service users - where the indemnity claim has been directed to
the wrong service user. This may occur when the DDI has been
subject to a bulk change – see section 7E for further information
relating to bulk change
None All service users - where the indemnity claim has been submitted
more than once
None All service users - where the collection / core reference has not been
included or is incorrect
None All service users - where the amount of the indemnity claim is not
the same as the value of the payments collected from the paying
customers account on the dates stated
None All service users - where the indemnity claim has been preceded by
an ARUDD (Advice of Unpaid Direct Debit) for the same collection
None All service users – where the service user has already previously
refunded the payer electronically. Only applicable where the service
user can evidence that the amount and account to which the funds
were returned match the details on the DDIC.
____________________________________________
83 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Consequential loss - The paying PSP will raise any claim None
for consequential loss with the service user, using a
paper indemnity claim form. Refer to section 7A.7
‘Consequential loss’
NB – Where a service user has made an error which does not fall within the valid indemnity claim criteria, this will be referred to the Direct Debit
Scheme, who will determine liability and give their authority for an indemnity claim to be raised.
____________________________________________
84 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Automated submissions contain the same information as the paper indemnity claim form. Details of
indemnity claims raised via the automated process are available on a daily DDIC Advice report
available to download on working day 1 via the payment services website or via Bacstel-IP software,
see Appendices section 17D for example report. The report is advance notice to the service user that
their account will be debited with the amount(s) shown 14 working days after the indemnity claim
was submitted. See section 7A.4.
The paying PSP will, therefore, refund the payer immediately and only raise an indemnity claim
where there has been a service user error. Where there has been an error by the paying PSP the
paying PSP may raise a refund request. Refer to section 7A.8 ‘Refund request’.
Rule: If the payer approaches the service user direct regarding an error, the service user shall refer
the payer to the paying PSP or contact the paying PSP asking them to raise an indemnity claim, see
section 7A.1.
Guidance: Providing a refund to the payer direct could lead to the payer obtaining the refund twice
i.e. once from the paying PSP and once from the service user. Should this occur the service user
would have to contact the payer for repayment of the duplicated amount.
This will involve a debit to the service user and contra to the PSP. The settlement date will be shown
on the DDIC Advice report, which is available to download on working day 1 via the payment services
website or via Bacstel-IP software. The entry to the service user’s account will be identified by ‘DDIC’
in the first 4 characters of the reference. Refer to Appendices section 17D for example report.
____________________________________________
85 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
A service user may however raise a challenge if they receive an indemnity claim where a valid
challenge reason exists, see table in section 7A.1, and subject to the procedures and timescales in
section 7A.5.
Note: The challenge process is not the only route open to the service user. The service user retains
its right to take action directly against the payer. Direct Debit is the method of collecting payments
and the PSPs are not responsible for any underlying contract between the service user and the payer.
Challenges should be raised using the contact telephone numbers and / or e-mail addresses provided
specifically for this purpose. This information is available from www.bacs.co.uk/ddicchallengecontacts
Rule: When contacting the PSP the service user must provide the following details about the
indemnity claim being challenged:
– Date of the claim
– 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 they are able to provide
Two types of challenge exist. Those that require supporting documentary evidence and those that
don’t.
____________________________________________
86 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
When contacting the paying PSP the service user will be advised how the documentary evidence
should be sent e.g. post, secure email, fax.
Acceptance of evidence by the paying PSP may, in some cases, depend on the quality / contents of
the document received. When providing evidence, it is considered best practice for a service user to
redact personal information contained within the document. The document must however remain fit
for the purpose for which it is intended.
Paying PSPs will respond to matters raised under the challenge process above within 2 working days.
Where this timeframe cannot be met paying PSPs will keep service users advised of progress.
The paying PSP will either reject the challenge or if accepted will cancel the indemnity claim. In either
case the paying PSP will advise the service user using the contact details previously provided.
Cancellation of the indemnity claim should be applied before the end of working day 11.
Failure to submit the cancellation by this time will result in settlement occurring. Cancellations will
show on the service user’s DDIC Advice report, see Appendices section 17D for an example report.
The report is available to download on working day 1 via the payment services website or via Bacstel-
IP software.
In exceptional circumstances, despite the challenge being raised within the required timescales as
documented above, it may not be possible for the paying PSP to cancel the claim by working day 11.
In such circumstance the PSP will advise the service user and agree the mechanism for generating the
proceeds to the service user i.e. FPS, CHAPS or Bacs.
NB: Service users should be aware that a DDI or contract shall not be regarded for this purpose as
valid if the paying PSP has been unable to establish the validity of the DDI or contract with the payer
or the payer asserts that these were given as a result of mistake or misrepresentation. In such cases
the service user would be required to liaise directly with the payer.
Where the challenge is accepted by the paying PSP, cancellation of the claim must be applied before
the end of working day 11.
Failure to submit the cancellation by this time will result in settlement occurring. Cancellations will
show on the service user’s DDIC Advice report, see Appendices section 17D for an example report.
____________________________________________
87 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
The report is available to download on working day 1 via the payment services website or via Bacstel-
IP software.
In exceptional circumstances, despite the challenge being raised within the required timescales as
documented above, it may not be possible for the paying PSP to cancel the claim by working day 11.
In such circumstance the PSP will advise the service user and agree the mechanism for generating the
proceeds to the service user i.e. FPS, CHAPS or Bacs.
Paying PSPs will continue to use paper indemnity claim forms for indemnity claims of £125,000 and
above. See Appendices section 18B for example form.
Only one reason will be given on an indemnity claim form and such claims will be raised directly with
the service user’s sponsor.
On receipt of the indemnity claim the sponsor will provide the service user with either –
Where the SUN has been deleted off the Bacs system the paying PSP will submit a paper indemnity
claim to the service user’s sponsor. See Appendices section 18B for example form.
The form will provide details of the reason for the claim along with the settlement account details
and, where appropriate, the date of any amendment / cancellation advice sent to the service user.
Only one reason must be given on an indemnity claim form.
Rule: Indemnity claims must be settled electronically by the service user to the paying PSP within 14
working days from the date of the claim.
Rule: Settlement must be made electronically and must be directed to the account specified on the
bank giro credit attached to the claim or, where a copy of the claim has not been provided, to the
details provided by the sponsor. The payment must also quote the reference provided.
If the service user fails to settle the indemnity claim by working day 14, the paying PSP will raise non-
settlement with the service user’s sponsor on working day 15. The sponsor will settle the outstanding
indemnity claim by debiting all amounts to the service user’s account. The service user is deemed to
____________________________________________
88 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
have provided their sponsor with the authority to make such debit by whatever method necessary by
virtue of agreeing to abide by and operate within the set procedures as defined herein.
The sponsors will be closely monitoring service users who fail to settle indemnity claims within the
specified period, see section 8A.1E.
Rule: In the event that a service user receives an indemnity claim form where the ‘reason for claim’ is
either incomplete or incorrectly completed, the indemnity claim remains effective. Should such a
claim be received the service user must advise its sponsoring PSP within 3 working days of receipt of
the claim. The sponsoring PSP will contact the paying PSP to clarify the correct reason for the claim.
The paying PSP will issue a replacement form, dated the day of issue, and dispatch it by first class
post to the sponsor. On receipt of the replacement form the sponsor will provide the service user
with either a copy of the claim or provide details of the claim in accordance with section 7A.6. The
service user will provide settlement of the claim within 14 working days of the date of the
replacement form, see section 7A.6C.
Rule: The indemnity does not permit the rejection of any claim made by the paying PSP.
Rule: Where a service user receives an indemnity claim which it believes does not conform to the
valid indemnity claim criteria as detailed in section 7A.1, it must nevertheless pay the claim.
Guidance: The service user may then raise a challenge, subject to the criteria in section 7A.1 and
timescales in section 7A.5A.
If the payer raises a claim for consequential loss arising as a result of the service user failing to collect
a Direct Debit, the payer will be directed to the service user by the paying PSP.
Paying PSPs are not required to undertake refunds in respect of a consequential loss claim prior to
receipt of monies, in respect of that claim, from the service user.
The paying PSP will refund the payer. The claim must not include a request for consequential loss.
____________________________________________
89 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Settlement of the claim is at the discretion of the service user. If the service user is in doubt as to
the validity of the claim it must seek guidance from its sponsor.
____________________________________________
90 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
7B ERROR RECOVERY
This section details the procedures, timings, and actions to be taken by the service user in the event
of errors in the collection file submitted to the Bacs service.
BEFORE DEBIT DUE DAY If file has not been submitted: The service user must make every effort to correct the
error and recreate the file with the correct data. If the collection file has already been
dispatched to the Bacs service for processing: The service user must contact the
payer’s PSP branch on the debit due day. See action detailed below ‘debit due date
plus 1’.
DEBIT DUE DAY PLUS 1 The service user should contact the payer’s PSP branch to request the payer’s
account to be re-credited. Payer’s PSP branch to credit the payer’s account and raise
an indemnity claim with the service user. The reason for the claim will be detailed as
‘claim requested by service user’ i.e. reason code 7 (refer to section 7A.1). This
request must be confirmed e.g. by fax, on the day of phone call.
Note: Paying PSPs will request the service user to provide its request to them in
writing.
1. If time allows i.e. on or before input day, arrange to extract the file
2. 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)
3. Effect a reversal of the erroneous entries the same day the error is identified
4. 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).
Rule: Where it has not been possible to extract the erroneous 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
____________________________________________
91 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
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.
Service users must also be aware that prompt action (particularly under 1. and 2. above) and
effective communication will help reduce the risk of payers seeking refunds under the Guarantee
resulting in indemnity claims being raised. Indemnity claims create additional work for both paying
PSPs and service users and should be avoided if possible.
Guidance: It would be advisable for a service user to advise its press office in order that they may
prepare a statement in anticipation of the issue being advised to the press.
These procedures apply to any error relating to a Direct Debit that has been collected in error,
regardless of whether it is collected before the due date or a double debit, for example.
Rule: If the system problem is not corrected in time to allow the service user to submit its file on the
required input day, it must contact its sponsor, as early as possible, who will advise on the
appropriate options available.
the collection conforms to the terms of that DDI – Refer to section 3D.4 ‘Paying PSP’s
responsibilities’
or
7D PROHIBITED PRACTICES
Rule: The following is not permissible:
____________________________________________
92 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Where a DDI is held, the service user must not ask the paying PSP to make collection by any
other means
Payments for £20million and above cannot be sent via the Bacs service and must not be broken
down into a number of lower value (below £20million) payments and submitted through the
service.
____________________________________________
93 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
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 BCP is only available to AUDDIS
service users. The new service user, but not necessarily the old service user, must be AUDDIS
enabled.
Rule: Specific criteria and safeguards apply when using the BCP and a service user must apply to its
sponsor to obtain approval prior to undertaking a bulk change.
• Company name
• Legal status
When transferring legal status i.e. the transfer of an undertaking from one entity to another, use of
the BCP is dependent on both entities agreeing to the transfer.
Contractual arrangements between the two entities (service users) are outside the scope of the
Scheme.
Further information relating to bulk change is available in The Bulk Change Process document
available from www.bacs.co.uk
Having transferred DDIs from one legal entity to another, the responsibility for the settlement of
Indemnity Claims rests with the new entity. This applies from the date of transfer and covers all past,
present and future Direct Debit collections. The sponsoring PSP will be able to provide further
information regarding the liability shift.
____________________________________________
94 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
95 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Monitoring of Direct Debits is undertaken to protect payers using the Scheme. Failure to carry out
these checks will not affect the validity of any claim under the Direct Debit indemnity.
Rule: A service user must pass its Direct Debit communications literature to its sponsor for approval.
This approval will extend to the technical specification of the service user’s submissions via the Bacs
service, new / amended DDIs and other literature.
Rule: The service user must advise its sponsor of any changes to its status, communications literature
or submissions via the Bacs service.
The sponsor reserves the right to withdraw its sponsorship, limit the amount collected or refuse to
accept a specific file of Direct Debits.
The paying PSPs may from time to time check a sample of Direct Debits presented by service users to
ensure that operational standards set out in this guide are met. The checks may also be applied to
ensure the collected Direct Debits conform to the terms of the DDI lodged by the service user.
Bacs will provide a number of statistics to the sponsors on a monthly basis as a means for them to
gauge whether AUDDIS service users are operating effectively and efficiently and complying with the
rules of the Direct Debit Scheme and the AUDDIS service. Failure to meet the level of performance
expected will be referred to the service user’s sponsor who will liaise with the service user to
establish the reasons why and identify an appropriate solution to be applied.
Paperless Direct Debit service users should note that their sponsor will monitor the service and
service users must ensure that they comply with the rules of the Direct Debit Scheme, AUDDIS and
the Paperless Direct Debit service. Failure to comply will be referred to the service user’s sponsor
who will liaise with the service user to establish the reasons why and identify an appropriate solution
to be applied.
____________________________________________
96 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Guidance: Paying PSPs may refuse paper DDIs which are not legible or do not comply with the DDI
regulations detailed in this guide. Refer to section 3A.1B ‘Design of the Direct Debit Instruction’.
These may be returned to the service user by the paying PSP marked ‘lodgement refused’. Refer to
section 3D.2 Rejection of Direct Debit Instruction lodgement. The paying PSP may request the service
user’s sponsor to investigate those DDIs which do not comply with the required standard.
Additionally, where the sponsor receives notification of the use of non-standard communications
literature (e.g. the advance notice; Direct Debit Guarantee issued to the payer) the sponsor will be
required to liaise with their service user and request them to change to the required standard.
An indemnity claim may be raised by the paying PSP when the payer disputes the validity of a Direct
Debit applied against their account as a result of an error by the service user. In all instances the
service user is required to settle the indemnity claim within 14 working days of the date of the claim.
Refer to section 7A ‘Indemnity claims’.
Sponsors will be closely monitoring that indemnity claims are raised in accordance with the Rules and
may at their discretion reconsider a service user’s use of the Direct Debit Scheme.
A sponsor may apply a limit against a service user’s nominated account. Overlimit referrals are raised
by Bacs and issued to the sponsor who will give their authority to process or extract the submission if
appropriate. This facility is used by the sponsor at their discretion.
The sponsor reserves the right to withdraw its sponsorship, limit the amount collected or refuse to
accept a specific file of Direct Debits into the clearing.
Bacs will provide Management Information (MI) to sponsors on a monthly basis to enable monitoring
of those service users who fail to access reports or who fail to act on the information contained
within.
Where the sponsor has been advised of an instance where its service user is operating outside of the
required standards, the sponsor will liaise with its service user to clarify the requirements, set an
appropriate time frame for the service user to apply changes and monitor progress.
Where service user’s documentation / procedures impact the integrity of the Scheme, the sponsor
will progress the issue.
____________________________________________
97 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
any changes to its status. Subject to specific criteria and safeguards laid down in the Bulk Change
Process, arrangements can be made to transfer DDIs from one SUN to another, and to a different
legal entity Service users must refer to their sponsor if they wish to make such arrangements.
See section 7E for further information relating to use of The Bulk Change Process.
any change to its DDI and any other communications literature in respect of its Direct Debit
operations or submissions via the Bacs service.
Rule: Service users must ensure that the mandatory security measures listed below are complied
with.
Whilst the advisory measures are guidance only it is highly recommended that service user
incorporate these into their procedures.
Mandatory measures
Smartcards must be removed from the smart card reader immediately upon completion of the
submission of payment files and collection of reports. This also applies to the use of tokens
The operating systems and browsers of machines used to submit files must be appropriately
patched and supported
Machines submitting files must have anti-virus software installed and configured so that it
updates whenever the manufacturer provides an update, either automatically or in accordance
with corporate or local IT security procedures. Perimeter and logical controls must also be
implemented to prevent unauthorised access to the submitting machine.
Advisory measures
Guidance: To help reduce the risk of Malware infection the following measures should be considered.
Terminals used for the submission of payment files should not be used to access any other web
services. Ideally, these devices should be standalone machines or should be segregated from the
rest of the corporate network
A full anti-virus scan of the machine submitting files should be carried out immediately prior to
making a payment run.
Rule: Service users must ensure that reports are downloaded via the payment services website or via
their Bacstel-IP software in a timely manner being mindful of the requirements for actioning items
on the report.
Bacs will provide Management Information (MI) to sponsors periodically to monitor those service
users who fail to access reports or who fail to act on the information contained within.
____________________________________________
98 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: Communication details e.g. email address and telephone number is recorded for each contact
i.e. Primary security contact and additional contact, registered to use Bacstel-IP. Each contact must
ensure that the information recorded is kept up to date. This includes the details recorded on the
Direct Debit Originator’s (DDO) database. Further information can be obtained from The Service user
guide – Bacstel-IP.
Rule: Service users must ensure that Bacstel-IP related software and other payment related
databases and applications are kept up to date when provided with updates by their Bacs approved
software solution supplier.
An updated copy of the ISCD or EISCD is made available by your Bacs approved software solution
supplier at a minimum frequency of monthly.
Rule: Service users must update any databases or applications that use sorting code information at
least monthly, but ideally weekly to ensure that up to date information is used.
If sponsor PSP monitoring reveals an unacceptable level of error or substantial deviations from
Scheme Rules, the service user will be advised accordingly.
If no subsequent improvement is made, the service user may be required to withdraw from the
Scheme. Refer to section 9B ‘Compulsory termination’.
Within 48 hours of receiving a complaint, Bacs will acknowledge receipt with a holding letter
detailing timescales for a response. Also within the same 48 hours, Bacs will forward details of the
complaint to the service user via the sponsor or direct to the service user with a copy to the sponsor.
Rule: Within 10 working days of receiving the complaint, the service user must forward a written
response to Bacs, either via the sponsor or direct, detailing the findings of the investigation. If the
resolution includes repayment of funds the service user must advise how and when these will be
repaid; repayment of funds must be returned within 5 working days of resolution. If the service user
is not in a position to resolve the complaint, then it must advise Bacs of the timescales for the final
resolution. Within 48 hours of receiving a response from the service user, Bacs will advise the
complainant.
____________________________________________
99 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
100 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Introduction
There are three circumstances in which a service user is required to withdraw from the Scheme:
Voluntary termination
Compulsory termination
The contractual capacity of the service user is terminated by legal process, for example, by
bankruptcy or winding up or a merger or acquisition of or by another company.
The service user’s sponsor will withdraw the service user’s SUN from the Scheme and advise all the
sponsors and Bacs of the termination of the service user’s participation.
Rule: Even though the service user has ceased to collect Direct Debits it is still liable for any
indemnity claims which may be raised by the paying PSP for Direct Debits applied to the payer’s
account during the period of the service user’s participation in the Scheme. In all cases this liability is
not restricted in respect of time or amount.
9A VOLUNTARY TERMINATION
Rule: A service user must plan the withdrawal very carefully in close consultation with its sponsor.
Guidance: The service user withdrawing voluntarily from the Direct Debit Scheme may consider it
prudent to establish a contingency reserve for the purpose of meeting any claims which may be
received in respect of any indemnity liability which may arise subsequent to withdrawal of the
service user from the Scheme, in respect of Direct Debits originated prior to this event.
9B COMPULSORY TERMINATION
The rules include a process for the compulsory termination of a service user that causes significant
problems for the industry as a whole. The details of this process, which is separate from any
contractual arrangements between a service user and its sponsor, are available from sponsors on
request.
It should be noted however, that if, following instigation of the compulsory termination process, a
service user fails to remedy a problem within the timescale laid down by its sponsor, the sponsor will
escalate the issue to the Pay.UK. The service user will be removed from the Scheme if the Pay.UK
reasonably believes that:
____________________________________________
101 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Direct Debiting operations are being carried out in a manner which constitutes an abuse of the
Scheme or affects the integrity of the Scheme or are being carried out without due regard to the
interest of payers
there is evidence that rules and procedures detailed in this guide are being deliberately ignored.
While sufficient notice of termination may be given to allow the service user time to make
alternative arrangements, Pay.UK and the sponsor reserve the right to terminate a service user’s
participation in the Scheme on immediate or short notice, notwithstanding any disruption which may
occur. Pay.UK and the sponsor accept no liability for any loss which a service user may suffer as a
result of termination from the Scheme.
Rule: The service user must not raise any DDI or Direct Debit after the commencement of a relevant
insolvency event. Service users should note that the SUN will be withdrawn by the sponsor as soon as
possible after it has notice of the occurrence. The sponsor will liaise with the service user on this
issue.
Further information of the Scheme requirements, which are separate from any contractual
arrangements between a service user and its sponsor, are available from sponsors on request.
____________________________________________
102 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
103 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
This appendix provides rules and guidance on variations to the standard set ups allowed under the
Direct Debit Scheme.
Authorisation of a variation in procedure will not diminish any liability under the indemnity that
might otherwise arise.
NB – All names used in the examples in this section are for illustration purposes only.
Trading names do not necessarily have to be registered at Companies House, providing the name is
recognised as being in the public domain.
Rule: Before being able to use a trading name in conjunction with a Direct Debit application, it must
be registered on the Bacs service by the sponsor on payment services and on the Direct Debit
Originator’s (DDO) database. The use of service names is permissible if accompanied by the trading
name. Service names cannot be registered on payment services.
Rule: New service users must have a separate SUN for each trading name. For existing service users
the sponsor may agree that a service user must use a separate SUN, but not necessarily for each
trading name.
Rule: In setting up trading names the service user will be responsible for the following:
The trading name must be used on both the Direct Debit Instruction (DDI) and Direct Debit
record (field 9 of the data record).
Collected funds must be credited to an account owned by the service user, and held with its
sponsor, either in its name, which is registered at Companies House, or trading name.
Rule: In addition if a service user is using facilities management or management administration they
must also comply with the rules for these applications.
____________________________________________
104 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
To be used when an existing service user uses a trading name with no facilities management or
management administration facility.
Service user
Using own SUN
Indemnity signed by service user
Registered name
Operation.
Trading Name
Trading name of service user (e.g. Smiths Ltd trading as Jones Footwear)
Payer relationship established
Managing own Direct Debit operation (working under the name of Jones Footwear).
NB – Smiths Ltd could use several trading names under a single “SUN “at the sponsor’s discretion.
Example
Account short name from service Smiths Ltd trading as Jones Footwear 18
user account details on payment
services
Name on Direct Debit Instruction Jones Footwear or Smiths Ltd trading as Jones Footwear No limit
Name in field 9 of data record Jones Footwear or Smiths Ltd trading as Jones Footwear 18
To be used when a new service user uses a trading name with no facilities management or
management administration facility.
Service user
Using own SUN
____________________________________________
105 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Trading name
Trading name of service user (e.g. Smiths Ltd trading as Jones Footwear)
Payer relationship established
Managing own Direct Debit operation (working under the name of Jones Footwear).
NB – The service user could have several SUNs using Jones Footwear as the trading name or using
different trading names.
Rule: In such cases they must have a separate SUN for each trading name.
Example
TRADING NAME FACILITY NEW SERVICE USER FIELD
LENGTH
Service user name registered on payment services Smiths Ltd trading as Jones Footwear 33
Account short name from service user account Smiths Ltd trading as Jones Footwear 18
details on payment services
Name on Direct Debit Instruction Jones Footwear or Smiths Ltd trading as No limit
Jones Footwear
The service user (FM provider) will have a contract with the organisation for the collection and / or
administration of Direct Debits on their behalf. Contractual arrangements between the FM provider
and their clients are outside the scope of the Scheme.
The FM provider will be clearly defined as the service user i.e. the owner of the SUN and the
indemnity collecting Direct Debits on behalf of a third party, the FM client, to whom the money is
due.
____________________________________________
106 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Before being able to use this application the SUN must be registered on the Bacs service, by the
sponsor, on payment services and on the Direct Debit Originator’s (DDO) database.
Depending on their business model the FM provider (service user) may elect to provide each client
(FM client) with an individual Service User Number (SUN) or to collect all payments under a single
SUN.
In setting up facilities management the service user will be responsible for some or all of the
following:
Corresponding with the payer, receipt of completed Direct Debit Instructions (DDIs) and
lodgement with the paying PSPs
Complying with the Direct Debit Scheme Rules including any resulting indemnity claims
Management of returned, amended and cancelled DDIs
Management of files and collection of Direct Debit records on the due dates including
reconciliation of processed, rejected and returned items
Rule: Regardless of the business model used i.e. using a separate SUN for each FM client or a single
SUN, proceeds from the collection of Direct Debits under the “facilities management” agreement
must be segregated and no funds should be paid directly into a client’s own account.
Notwithstanding the content of the FCA’s approach document to the Payment Services Regulation
2017, Bacs regards that best practice dictates that proceeds are directed to an account in the name
of the service user, specifically designated “Clients” / “Trust accounts”. All such accounts must be
held at the same PSP i.e. the service user’s sponsoring PSP.
Rule: In all cases the service user will accept liability for any indemnity claims irrespective of whether
or not claims can be recovered from the client to whom the funds have been released. The sponsor
authorising such an arrangement will assume responsibility for its service user’s activities.
Rule: Once registered on the Bacs service the following must also be complied with:
____________________________________________
107 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
The service user’s name must be used with the Direct Debit payment record (Field 9 of the data
record)
FM client
Money is due to FM client from their customers
Payer relationship established
Not a service user
Does not have a SUN
There is no indemnity signed
Example
FACILITIES MANAGEMENT – USING INDIVIDUAL SUN FM CLIENT WITHOUT TRADING NAMES FIELD LENGTH
FOR EACH FM CLIENT
____________________________________________
108 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
FACILITIES MANAGEMENT – USING INDIVIDUAL SUN FM CLIENT WITHOUT TRADING NAMES FIELD LENGTH
FOR EACH FM CLIENT
____________________________________________
109 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
FM client
Money is due to FM client from their customers
Payer relationship established
Not a service user
Does not have a SUN
There is no indemnity signed.
Example
FACILITIES MANAGEMENT – USING FM CLIENT WITH TRADING NAMES FIELD LENGTH
INDIVIDUAL SUN FOR EACH FM CLIENT
Service user name registered on payment Service user re FM client trading as Knights* 33
services
Account short name from service user Service user re FM client trading as Knights* 18
account details on payment services
Name on Direct Debit Instruction Service user re FM client trading as Knights No limit
Name in field 9 of data record Either service user re FM client or service user or 18
FM client or Knights
Contra record Service user re FM client 18
*Guidance: When an FM client wishes to use a trading name, due to restriction in field lengths this
may be input as service user re FM clients trading name. Example given – service user re Knights.
Management administration allows a service user to outsource the processing and administration of
Direct Debits whilst still maintaining responsibility for the actions of the organisation that are acting
on their behalf and for the liability under the Direct Debit indemnity. This is invisible to the payer, as
all communications will appear as if they are coming directly from the service user.
____________________________________________
110 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
The service user will need to make their sponsor aware if they have outsourced, as they will need to
ensure they have the correct addresses for the Direct Debit Originator’s (DDO) database information.
Service user
Using own SUN
Indemnity (i.e. liability falls to service user)
Money is due to service user
Payer relationship established (i.e. consumers know they are signing up with service user).
Example
MANAGEMENT ADMINISTRATION SERVICE USER WITHOUT TRADING NAMES FIELD LENGTH
Service user
Using own SUN
____________________________________________
111 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Account short name from service user account Service user trading as Knights 18
details on payment services
Name on Direct Debit Instruction Knights or service user trading as Knights No limit
Account short name from service user account Service user trading as Knights 18
details on payment services
Name on Direct Debit Instruction Knights service user trading as Knights No limit
____________________________________________
112 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
113 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
114 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
whether the service user amalgamates the various amounts due into a single Direct Debit.
____________________________________________
115 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
MC/1234AB – 3 APR
MC/1234AB – 3 MAY
In using this approach, service users must accept the consequences of a payer advising their PSP that
they wish to cancel one of the contracts. As the paying PSP only has details of the one DDI this is all
the PSP can cancel even if the payer only wants some of the contracts cancelled. In this circumstance,
when the service user receives the ADDACS cancellation report, it should contact the payer to
determine whether all contracts are to be cancelled or just some and where appropriate obtain and
lodge a new DDI.
____________________________________________
116 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
117 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
118 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
119 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
120 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
121 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
122 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
123 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
124 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
125 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
126 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
127 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Verification that the customer is the account holder and therefore the payer. If the customer is
not the account holder a paper DDI must be sent to the payer for completion.
Note: The service user may however choose not to offer the option of a paper DDI. In such
instances customers would not be able to purchase the services offered using Direct Debit as a
payment method. This is a service user’s business decision and is considered as being outside of
the Direct Debit Scheme.
A list of measures to assist in verifying the payer’s details is available from
www.bacs.co.uk/documentlibrary
Taking the payer’s bank or building society account number, sort code and account name
Confirm that the person entering into the transaction is the only person required to authorise
debits from the account. If more than one person has to authorise debits from the account a
paper DDI must be sent to the payer for completion (optional see section 3B). Exceptions apply
to service users using electronic signature as a method of sign up (see section 3B). Failure to
obtain the correct authority could result in an increased risk of indemnity claims being received
Advice of the advance notice period
Confirmation of bank details back to the payer
An explanation of the Direct Debit Guarantee – this must be provided in full if the payer confirms
they require this
Advice of the organisation name that will appear against the Direct Debit on the payer’s bank
statement
A service user who is unable to lodge the DDI within 10 working days of the Direct Debit authority
being obtained must advise the payer that the Direct Debit will not be set up on their bank account
until XXXX (depending on when the service user will lodge the DDI). However in all circumstances the
service user must transmit the DDI no later than 6 months from the date of provision of the
authority. Failure to lodge the DDI within these timescales may result in increased instances of
rejected DDIs. The payer must still be sent confirmation of the Direct Debit details as described in
section 4C.
____________________________________________
128 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Example script
Assuming the payer has agreed to buy and asks to pay by Direct Debit and the payment amount to be
debited has been agreed.
OK thank you. To avoid delay and to save you having to fill in any paperwork I can set up your Direct Debit
Instruction right now over the phone. Would that be helpful?
Payer agrees.
Please can you confirm that you hold a UK bank / building society account and you are the account holder?
If yes, proceed.
Can I confirm that you are the only person required to authorise debits from this account?
If more than one person is required to authorise debits on the account, issue a paper DDI and close
call (optional see section 3B)
Can you confirm the name of the account you wish to be debited?
Take details.
Can you confirm the branch sort code of the account you wish to be debited?
Can you confirm the account number of the account you wish to be debited?
Take details (if unsure direct caller to cheque book or bank statement).
Ask if they have used this account to make Direct Debit payments before as some banks or building societies
may not accept Direct Debits for certain types of account.
Payer confirms.
Payer confirms.
____________________________________________
129 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Payer confirms.
We’ve agreed that the monthly amount will be £……, but is there a particular day of the month you would
like the money to come out of your account, for instance just after you’re paid?
If no preference is given, agree on the most suitable day for the service user.
The first collection will come out of your account on DD/MM and on the same day each month (depending
on the frequency agreed) thereafter. If there are any changes to the date, amount or frequency of your
Direct Debit, we will always give you XX working days’ notice in advance of your account being debited. The
company name that will appear on your bank statement against the Direct Debit will be XXXXXX. That’s it
you have set up your Direct Debit Instruction with us. You will be sent confirmation of this (by post / email /
other) within 3 working days of this phone call.
Or if incorporating the advance notice with the confirmation (in such cases the first Direct Debit
collection must be within 4 weeks otherwise confirmation must be issued within 3 working days as
above) -
The company name that will appear on your bank statement against the Direct Debit will be XXXXXX. If there
are any changes to the date, amount or frequency of your Direct Debit, we will always give you XX working
days’ notice in advance of your account being debited. That’s it you have set up your Direct Debit Instruction
with us. You will be sent confirmation of this (by post / email / other) no later than XX (number of working
days in accordance with advance notice period) working days before the first collection. `
All Direct Debits are protected by a guarantee. I can read it to you now or you can read it in our
confirmation letter, which would you prefer?
If the caller does not wish to hear the guarantee, go to the end.
In the future if there is a change to the date, amount or frequency of your Direct Debit, we will always give
you XX working days’ notice in advance of your account being debited. In the event of an error in the
collection of your Direct Debit, you are entitled to an immediate refund from your bank or building society.
You have the right to cancel at any time and this guarantee is offered by all the banks and building societies
that accept instructions to pay Direct Debits. A copy of the safeguards under the Direct Debit Guarantee will
be sent to you with our confirmation.
That completes the setting up of your Direct Debit Instruction. Thank you very much for your time today.
Goodbye.
If the payer already has a Direct Debit with the service user or is buying multi products i.e. gas and
electricity, then the script does not have to be repeated. However, it must be made clear to the
payer, how many Direct Debits are being set up, the references and the fact that the Direct Debits
will be taken from the same account.
____________________________________________
130 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
This is an enhanced service provided by the banking industry allowing Direct Debits to be set-up over the
telephone. All the normal safeguards of the Direct Debit Guarantee still apply and we will always confirm
the content of these calls to you in writing.
If the payer would prefer to use the post and receive a paper instruction for completion and return
(optional see section 3B).
I can do that for you. Is there a particular concern that you have with setting up the Direct Debit over the
phone now?
If the payer would still prefer to use the post (optional, see section 3B).
I can send you the forms in the post or, if you prefer, you can call back later. All the information you need to
set up a Direct Debit Instruction is on your cheques.
If the payer is not the account holder (optional, see section 3B).
As you are not the account holder, we will need to send the account holder a Direct Debit Instruction to
complete and return. Can I confirm the address to send this to?
I can understand that, but I can assure you that all information is retained in the strictest confidence. In the
event that you have any queries or dispute an entry on your bank account you can of course rely on the
Direct Debit Guarantee. Does that ease your concerns enough to want to go ahead now?
No – payer wants information in the post, check details and close politely.
I understand your concern and to reduce customers’ concerns a number of measures are in place to
safeguard against genuine mistakes. There is the Direct Debit Guarantee. Firstly, if at any time money is
debited from your account incorrectly the banks and building societies guarantee to refund it. Secondly, no
changes to the date, frequency or amount debited can be made without notifying you normally at least XX
working days in advance of your account being debited. And finally, you have the right to cancel any Direct
Debit at any time by simply contacting your bank or building society. Please also notify us. A copy of these
safeguards will be included in our confirmation letter.
Does that answer your concerns sufficiently for you to want to go ahead with the Direct Debit set-up now?
No – payer wants information in the post, check details and close politely.
____________________________________________
131 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Rule: The name of the service user must be made clear to the payer within the screen(s). All
service users must include the following mandatory items within their screens hence these are the
minimum requirements:
SSL server security must be present and must be a minimum of SHA-256 SSL supporting TLS1.1 or
TLS1.2
A postal and / or email address must be provided to the payer
A general enquiries / customer service contact number and / or the provision of a live chat
facility must be given to assist the payer if he has any urgent issues or a complaint to raise
Verification that the customer is the account holder and therefore the payer. If the customer is
not the account holder a paper DDI must be sent to the payer for completion or a copy must be
available for printing See Appendices section 13J for example DDI.
Note: The service user may however choose not to offer the option of a paper DDI. In such
instances customers would not be able to purchase the services offered using Direct Debit as a
payment method. This is a service user’s business decision and is considered as being outside of
the Direct Debit Scheme. A list of verification measures to assist in verifying the payers details
is available from www.bacs.co.uk/DDVerificationMeasures
Taking the payer’s bank or building society account number, sort code and account name
Confirm that the person entering into the transaction is the only person required to authorise
debits from the account. If more than one person has to authorise debits from the account a
paper DDI must be sent to the payer for completion. Exceptions apply to service users using
electronic signature as a method of sign up (see section 3BA copy complying with the mandatory
format in Appendices section 13J must be available for printing by the payer (optional see section
3B). Failure to obtain the correct authority could result in an increased risk of indemnity claims
being received
Confirmation of bank details back to the payer.
Advice of the advance notice period*
Advice of the company name that will appear against the Direct Debit on the payer’s bank
statement*
*Strongly recommended but not mandatory if a copy of the Guarantee is being provided, see
above.
An explanation of the Direct Debit Guarantee or a copy of the Guarantee, as shown in section
13J. A copy of the Direct Debit Guarantee must be provided with the confirmation of Direct Debit
set-up.
A service user who is unable to lodge the DDI within 10 working days of the Direct Debit set-up must
advise the payer that the Direct Debit will not be set up on their bank account until XXXX (depending
on when the service user will lodge the DDI). However in all circumstances the service user must
transmit the DDI no later than 6 months from the date of receipt of the authority. Failure to lodge
____________________________________________
132 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
the DDI within these timescales may result in increased instances of rejected DDIs. The payer must
still be sent confirmation of the Direct Debit details as described in section 4C.
Guidance: The information required to complete the DDI does not need to be captured directly onto
an on-screen DDI, but once completed service users may wish to display a copy of the completed DDI
as per the example in Appendices section 13K.
The Direct Debit safeguards and guarantees apply. No changes in the amount, date or frequency to
be debited can be made without notifying you at least XX working days in advance of your account
being debited. In the event of any error being made in the payment of your Direct Debit, you are
entitled to an immediate refund from your bank or building society. You have the right to cancel a
Direct Debit Instruction at any time simply by writing to your bank or building society, with a copy to
us.
Alternatively you can print off your on-screen Direct Debit Instruction and post it to us. If you are
unable to print please contact us on XXXXXX (tel no) and we will post you a paper Direct Debit
Instruction (optional see * below).
The details of your Direct Debit Instruction will be confirmed to you within 3 working days or no later
than 10 working days before the first collection. Click the mouse on YES or NO to confirm details:
NO (redo form)
____________________________________________
133 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
* The service user may however choose not to offer the option of a paper DDI. In such instances
customers would not be able to purchase the services offered using Direct Debit as a payment
method. This is a service user’s business decision and is considered as being outside of the Direct
Debit Scheme.
£__/__/__/__/__/__/__/__.__/__/
Date each month for collection (or other collection frequency) /__/__/
The company name which will appear on your bank statement against the Direct Debit will be
XXXXXXXX.
NO (redo form)
____________________________________________
134 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
135 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
136 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
137 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
138 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
139 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
140 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
141 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Fixed rate We will be setting up a Direct Debit, which will If you wish to set up a Direct Debit,
1 take equal monthly payments from your bank an agreed amount of money will
(optional)
account. Do you wish to go ahead with this? be collected by us each month
enabling you to spread the annual
cost of your account. Do you wish
to go ahead with this?
Caller is account Is the name we have on your account the same Please confirm that the name on
holder as the name that appears on your bank the bank account from which you
account? wish to make payments is the
same as the name that appears on
your <company> account.
Sole authoriser Are you the sole authoriser for the bank Does anyone else need to
3
account to be debited? authorise debits from this
account?
____________________________________________
142 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Collection amount The suggested amount for your monthly Direct The amount suggested would be
Debit is <amount>; this includes your the amount collected each month
outstanding balance (as well as a Direct Debit from your bank account. It includes
discount). Do you want to continue? any outstanding balance as well as
a direct debit discount. Please
confirm that you wish to go ahead
with this.
Bank account details The next step will be to collect your bank What is the account number for
account details. What is your bank account the bank account that the Direct
number? Debit will be collected from?
Thank you. Now what is your branch sort code, You should read the number as a
which is a 6 digit number? series of digits including any zeroes
Collection date OK. What is the day of the month that you In order to set up a Direct Debit
would prefer the collection to be made on; (it you need to choose the day on
must be between 1 and 28). which the payment will be
collected. What is your preferred
day of the month which must be
between 1 and 28.
Do you want to go ahead with this? Please confirm that you wish to set
____________________________________________
143 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Set up on other Do you want to set up a Direct Debit on any of You have more than one account
accounts your other accounts? with us and can set up a Direct
Debit on each of them during this
phone call. Do you wish to set up a
Direct Debit on any other of your
accounts?
2. Caller is account holder – if negative response then inform caller that a DDI will be sent out
____________________________________________
144 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
145 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
0 Refer to payer A payer’s PSP is not in a position to pay Service user may represent up to
the Direct Debit; (for some reason one month from original processing
other than the exception below). day – it is recommended that the
payer is notified of this 5 working
OR
days in advance of the
The service of a Garnishee Order or representation.
Arrestment on the payer’s account,
Service user will need to establish
their bankruptcy, liquidation or
from the payer the reason for non-
appointment of receiver
payment and likelihood of payment
upon representation.
1 Instruction Instruction cancelled by payer or their Service user must liaise with payer
cancelled PSP to agree the payment method for
collection of any outstanding funds
2 Payer deceased
3 Account Account transferred to a new PSP First check you have not been
transferred notified of the new PSP details, if not
you must obtain a new DDI from the
payer. Collection must be suspended
until a new DD set up and advance
notice is issued to the payer
4 Advance notice Payer disputes time, amount or Service user should not collect
disputed frequency of advance notice and has further Direct Debits until it has
requested single payment to be resolved the dispute with the payer
countermanded
5 No account (OR Account Number is not recognised at Service user should check DDI
wrong account the paying PSP information and/or liaise with payer
type)
6 No Instruction No Instruction held with paying PSP Service user should check DDI
information and/or liaise with payer
and if appropriate obtain new
Instruction
____________________________________________
146 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
7 Amount differs Payer states the amount of the Direct Service user should not collect
Debit differs from the amount in the further Direct Debits until it has
advance notice to payer resolved the dispute with the payer
8 Amount not yet Payer states date of debiting is in Service user should not collect
due advance of the due date specified in further Direct Debits until it has
the advance notice to the payer. resolved the dispute with the payer
AUDDIS service users only – It is less
than 2 working days since the DDI was
lodged
9 Presentation Payer states date of presentation is Service user must give further
overdue more than 3 working days after due advance notice to the payer before
date in advance notice to payer Direct Debit is collected
OR
Re-presentation of Unpaid Direct Debit
is more than one month from original
Direct Debit processing day
B Account closed Payer has closed their account for an If the Direct Debit is to continue the
unknown reason service user must obtain a new DDI
for a different/new account
0 Instruction Paying PSP has cancelled Service user cannot collect via Direct Debit on this
cancelled - Refer to Instruction account. If Direct Debit is to continue the service
payer user must obtain a new DDI for a new account
1 Instruction Payer has instructed Service user must liaise with the payer to agree
cancelled by payer paying PSP to cancel DDI the payment method for collection of any
outstanding debts
2 Payer deceased
____________________________________________
147 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
3 Account Account transferred to a 1. If the old and new PSP details are included on
transferred to a new PSP the advice you must update your records with
new PSP the new customer account details. AUDDIS
service users only must send a 0N to the new
PSP to lodge the new instruction. A 0C must
not be sent to the old PSP to cancel the DDI.
2. If only the old PSP details are quoted in the
advice first check to see if you have already
been notified of the customer’s new account
details.
If you have not been notified of the new
account details you must obtain a new DDI
from the payer and the DD collection must be
suspended until the new DDI is set up and
advance notice issued to the payer.
B Account closed Payer has closed their If the Direct Debit is to continue the service user
account for an unknown must obtain a new DDI for a different/new
reason account
C Account New account details Service user must apply change to data file and
transferred to a supplied to the service continue with Direct Debit collections. AUDDIS
different branch of user service users only – A 0C/0N pair must not be sent
a PSP on receipt of this message
D Advance notice Payer disputes time, Service user should not collect further Direct
disputed amount or frequency of Debits until it has resolved the dispute with the
advance notice payer
E Instruction Paying PSP will advise Service user should collect Direct Debits using new
amended amendment via ADDACS details. AUDDIS service users only –A 0C/0N pair
message must not be sent on receipt of this message
R Instruction re- Paying PSP may re- Service user may resume direct debiting under the
instated instate a cancelled DDI reinstated Instruction. – A 0C/0N pair must not be
up to two months from sent on receipt of this message. However, a new
cancelation DDI must be obtained and lodged if re-
instatement is identified after the two month
period
____________________________________________
148 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
1 Instruction Payer has instructed Service user must liaise with payer to agree the
cancelled by payer paying PSP to cancel DDI payment method for collection of any outstanding
funds
2 Payer deceased
3 Account Account transferred to First check you have not been notified of the new
transferred another PSP PSP details, if not you must obtain a new DDI from
the payer. Collection must be suspended until a
new DD set up and advance notice is issued to the
payer
5 No account Account number is not Service user should check Direct Debit information
recognised at the paying and/or liaise with payer
PSP
6 No Instruction Instruction does not Service user should check the DDI and/or liaise
exist on paying PSPs with payer
database. (only applies
to receipt of a 0C)
7 DDI amount not Validation has detected Service user should correct the record and
zero field 8 not zero or blank resubmit
space filled
B Account closed Payer has closed their If the Direct Debit is to continue the service user
account for an unknown must obtain a new DDI for a different/new
reason account
C Account New account details Service user should apply change to data file and
transferred to a supplied to the service continue with Direct Debit collections. A 0C/0N
different branch of user by paying PSP pair must not be sent on receipt of this message
the PSP
F Invalid account Paying PSP does not Service user will need to obtain new account
type allow Direct Debits on details from the payer. The Direct Debit cannot be
this type of account applied
G PSP will not accept Paying PSP does not Service user must liaise with payer and obtain a
Direct Debits on allow Direct Debits on new DDI for a different/new account
account this account
H Instruction has Occurs when a service A 0N DDI will be required to re-activate this DDI if
expired user attempts to convert collections are to resume. Service users must
a DDI which is shown as ensure they have the payer’s authorisation to
expired on the paying collect under expired Instruction
PSPs database
____________________________________________
149 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
I Payer Reference is Paying PSP has matched Service user should allocate a different reference
not unique the DDI to an existing and lodge DDI, again using 0N
DDI with a similar
reference that has more
or fewer characters
K Instruction Paying PSP has cancelled Service user cannot collect via Direct Debit on this
cancelled by the DDI account. If Direct Debit is to continue the service
paying PSP user must obtain a new DDI for a new account
L Incorrect payer’s Either: Service user should undertake sort code validation
Account Details and modulus checking prior to sending the DDI
- the sort code / account
transactions to the Bacs service or, if already doing
number has failed the
this, should ensure that they are using the latest
modulus check
version
- the sort code does not
exist
- the account number is
not all numeric or is all
zeros
- the account type is
invalid.
M Transaction Code / Transaction codes which Service user has sent ‘0S’ DDI transactions after
User Status are not allowed whilst in being given ‘LIVE’ status on the Bacs service
incompatible this status have been master files. Service user should re-submit
sent transactions with 0N as the transaction code
N Transaction This code will be Service user should refer back to their payer and
disallowed at returned where paying obtain a DDI for a different/new account
payer’s branch PSPs have expressly
disallowed the set-up of
DDIs at the branch in
field 1 of the transaction
O Invalid reference The reference in field 10 Service user should ensure that references meet
of the DDI record does the rules of the AUDDIS service (see Appendices
not comply with the section 12 of this document)
AUDDIS rules
P Payer’s Name not Validation has detected Service user should correct the record and re-
present field 11 is blank. A submit
payer’s name should
always be entered
____________________________________________
150 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
Q Service user’s Validation has detected Service user should correct the record and re-
name blank field 9 is blank. The submit
service user’s company
or trading name should
always be entered
Reason codes 7 and L to Q are only generated by the Bacs service and occur as a result of its
validation of DDI records
____________________________________________
151 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
152 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
153 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
This report, available for downloading via the payments services website or via Bacstel-IP software
on day 4 (5) of the unpaid cycle, details the Direct Debits that have been returned unpaid by the
paying PSPs. The report lists all returned Direct Debits for each Service User Number for any one
processing day. If the service user submits Direct Debits for processing on consecutive working days
this may result in some transactions for two consecutive days being displayed on one advice where
the paying PSPs may have applied late returns. Refer to section 5B for further information relating to
unpaid Direct Debits.
____________________________________________
154 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
155 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
156 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
157 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
158 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
159 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
160 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
161 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
162 |VERSION 5.3 – DECEMBER 2019
THE SERVICE USER’S GUIDE AND RULES TO THE DIRECT DEBIT SCHEME
____________________________________________
163 |VERSION 5.3 – DECEMBER 2019