Bacs, the Direct Debit system operator, has recently communicated to all service users to reiterate the rules surrounding advance notice.
What is the advance notice?
In Direct Debit terminology, the advance notice is the personalised communication to your customers, or payers, a set number of days before you first collect a Direct Debit payment. The same advance notice must be given whenever you make any changes to the Direct Debit amount, due date and/or frequency. The timescale of this communication, or advance notice period, must adhere to what was originally advised to your payers in the Direct Debit Guarantee, and must also be delivered by the method of communication as advised to the payer. If this is delivered by post, then enough time must be allowed for mailing.
An advance notice must be approved by the sponsoring payment service provider (PSP) before it is used and issued to payers.
Why is the advance notice important?
All service users of the Direct Debit scheme must adhere to the Bacs scheme rules in order to remain compliant and entrusted with a licence to collect payments by their sponsoring PSP.
If insufficient advance notice is given to the payer, the result can be complaints from customers or, far worse, indemnity claims. Since there is no time limit on indemnity claims, the service user may discover that their advance notice is non-compliant months or years after it was first issued, so the problem may affect more payers and be a bigger issue than first appears.
What must be in the advance notice?
The following MUST be within the advance notice:
- Total amount of Direct Debit to be applied to the payer’s account
- Direct Debit due date
- 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
- Advance notice period
- Service user name and contact telephone numbers
- Optional: Service User Number (SUN).
Is there a default advance notice period?
The default advance notice period is a minimum of 10 working days plus postal time. However the advance notice period can be shorter than this, as long as this is communicated to payers within the Direct Debit Guarantee when the payer signs up for Direct Debit.
The advance notice period can be changed by first securing prior agreement from the sponsor, and then ensuring payers are notified. A copy of the Direct Debit Guarantee showing the revised advance notice period must also be issued.