If your organisation operates Paperless Direct Debit (PDD), then you have a responsibility to provide a Paperless Direct Debit Confirmation letter to new payers. This is a requirement under the Bacs Direct Debit Scheme Rules. It is an important communication for the payer and is in the organisations interest to provide.
What is a Direct Debit Confirmation Letter?
A Direct Debit Confirmation Letter is a formal notification sent by a Service User (the organisation collecting Direct Debits), to a payer (customer). It is sent after a new Direct Debit Instruction (DDI) has been set up using a paperless sign-up method. such as internet, telephone or face-to-face.
Its primary purpose is to confirm the set-up of the Direct Debit Instruction. It represents an opportunity for the payer to check the Direct Debit details to ensure they are correct. In addition, it is an opportunity to provide a copy of the Direct Debit Guarantee to the payer.
It is generally expected that the confirmation will be provided in a letter. This could be printed and posted. It could be made available via an online portal or it might be emailed – either as an attachment to an e mail or as the body of the email. Different formats are valid, as long as they contain the mandatory elements. Like all customer-facing Direct Debit letters and communications, the Confirmation needs to be approved before use. This would be undertaken by the sponsoring bank – in advance of being used. Whatever the format, the payer must be able to store and retrieve the Confirmation for future reference.
Why is it important to provide Paperless Confirmation?
✅ Customer Protection. Sending the confirmation of Direct Debit set-up, means that payers are aware the Direct Debit will be lodged on their bank account. This transparency should help prevent any surprises. If the payer is fully aware that a Direct Debit has been set-up they are less likely to subsequently challenge any collections.
✅ Accuracy. The Confirmation gives payers the chance to check – and correct – any errors. This increases the chance of successful Direct Debit sign-up and subsequently, collections.
✅ Scheme Compliance. Issuing a confirmation letter is a requirement of the Bacs Direct Debit scheme rules. Failing to send it, would result in a breach of the rules.
✅ Trust and Professionalism. A timely and clear Confirmation letter reassures customers that the organisation is legitimate, trustworthy, and well-organised. This is especially important when dealing with sensitive financial arrangements and should create confidence.
What must the Paperless Confirmation Letter include?
As documented in the Service Users Guide and Rules to the Direct Debit Scheme, a Paperless Direct Debit Confirmation must include the following key requirements:
- A heading advising confirmation of the set-up of the Direct Debit Instruction,
- Wording advising the payer to check the details contained in the letter,
- Payer’s account name,
- Payer’s account number. (For security reasons the first part of the account number e.g. the first four digits may be masked),
- Payer’s sort code,
- Service user’s telephone contact details or email address, in case the customer has questions or wants to cancel,
- Advice of right to cancel,
- Reference to be used on Direct Debit collections, which may appear on the payer’s bank account statement,
- Direct Debit Guarantee including Direct Debit logo.
Confirmation should either be followed by, or should include, the Advance Notice. If the Paperless Confirmation includes the Advance Notice, then it will also require the following:
- Details of the first payment – date and amount,
- How often payments will be taken and the day/date (e.g., monthly, annually).
To help Service Users comply with the Bacs Direct Debit rules, templates are available. These include templates for Paperless Confirmation letters without the Advance Notice and for Paperless Confirmation letters including the Advance Notice and a Payment Schedule. These are available from the Bacs Information hub. Alternatively Movimo can forward to you if required.
When should the Paperless Confirmation be sent?
If the first collection is being made within one month of sign up, the Service User may issue the confirmation and the advance notice together. This 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 if the confirmation is being provided separately from the Advance Notice – the confirmation must be provided within 3 working days of sign up.
Still got questions?
The Paperless Direct Debit Confirmation Letter is a vital part of setting up a Paperless Direct Debit. It helps protect payers, ensures transparency, and providing it quickly and efficiently helps your organisation remain compliant with Bacs Direct Debit Rules.
If you want to check if your payer communication is compliant with the Bacs Direct Debit Rules, or have questions about Paperless Confirmation, please contact us today. We are happy to help.