Recently we received a question from a customer about whether they needed to provide new Advance Notice if they re-presented a failed Direct Debit. Here’s what you need to know.  

What is a re-presented Direct Debit?

A re-presented Direct Debit is a Direct Debit which has been previously returned unpaid by the payers bank and is presented again by the service user for collection.

Does the Service User have authority to re-present failed Direct Debits?

In short – yes! When the payer signed-up to the Direct Debit – whether on paper or via a paperless sign-up such as telephone or internet, they gave their consent for their account to be debited. This consent also constitutes implied consent to the re-presentation of an unpaid Direct Debit. Note: The consent arises from the existence of the Direct Debit Instruction the payer agreed to, not the existence of a debt owed by the payer to the service user.

What are the rules around Re-presentation?

1. Re-presentation of failed Direct Debits must only occur when the service user can reasonably assume that the conditions necessary for collection will be met.
   – If the Service User was advised via an ARUDD report that the collection failed for example due to reason code 2 – Payer Deceased, then the conditions for collection are not going to be met.
   – If however the Direct Debit failed for reason code 0 – refer to payer, it is reasonable to assume that they could be met again. In this scenario, re-presented Direct Debits make sense.
   
2. An unpaid Direct Debit must only be re-presented if the following criteria are met:
   – the amount of the re-presented Direct Debit is the same as that originally attempted
   – it is identified by the use of transaction code 18
   
3. Re-presentation of an unpaid Direct Debit may continue for one month from the date on which first presentation was made.
   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.

Is new Advance Notice required?

And regarding the question about whether new Advance Notice is required, the answer is not necessarily! Guidance is provided by Bacs as follows:

“If the Direct Debit has been returned for the reason ‘refer to payer’ then additional advance notice is not mandatory but is recommended”.
SUGR v5.8

Remember though – if the collection/ transaction code 17 is used, then this isn’t a re-presented Direct Debit and new Advance Notice would be required.

Still have questions?

Contact us – we are happy to help!