How long to keep Direct
Debit Instructions
1. What is the Direct Debit Instruction?
The Direct Debit Instruction (DDI) is the way that the payer (the owner of a bank account) gives their authority for an organisation (service user) to collect Direct Debits from their account. Authority can be given via a paper Direct Debit Instruction that the Payer signs and returns. Alternatively it could be given via Paperless Direct Debit (PDD) sign-up methods. These include via the telephone, face-to-face, electronic document signature and the internet.
2. Do I need to keep signed Direct Debit Instructions?
In short – yes!
AUDDIS service users should retain paper Direct Debit Instructions if they collect them, as per the scheme rules. This allows the service user to use the DDI as proof that a payer provided authority for the Direct Debit. Should the payers bank request to see the Direct Debit Instruction, the service user should be able to produce this within 7 working days.
3. Can I keep a scanned copy or do I have to keep the original paper copy?
Rule: A service user shall store the original DDI or an image thereof.
The Service Users Guide and Rules to the Direct Debit Scheme, Bacs
Service users may store the original DDI, however many choose to scan and retain an electronic copy. This allows them to reduce physical storage requirements. Bacs advise that if an image of the DDI is kept electronically then it should be stored…
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 the essential features of the DDI are clearly visible and legible, including but not limited to the customer’s signature”
The Service Users Guide and Rules to the Direct Debit Scheme, Bacs
It’s best practice to ensure that the Direct Debit reference is included on the DDI prior to scanning / archiving. If not included, the DDI may be rejected if it is used to challenge an indemnity claim.
4. How long do I need to keep the Direct Debit Instruction for?
It is up to the service user to decide how long to store the paper and the method of storage.
The Service Users Guide and Rules to the Direct Debit Scheme, Bacs
The length of time that an organisation should store the DDI is not covered by the Scheme Rules. Rather, it is up to the organisation to decide based on their customer base and attitude to risk. Other considerations include the value of collections, the risk of indemnity claims, GDPR processes and storage arrangements.
Under the Direct Debit Guarantee, if a payer feels that an error has been made in the Direct Debit collection, they can request a refund. As a result, a payers bank may request a copy of the DDI. To respond to this, many organisations will keep the DDI for at least the length of the contract with the payer.
As the Direct Debit Guarantee is unlimited in time and amount however, the payer could request a refund at any time. The paying bank could therefore request a copy of the DDI at any time. This could even be after the contract has finished. Some organisations will therefore choose to keep a copy of the DDI indefinitely.
Remember: If a service user is unable to provide a copy of the DDI within 7 working days from the date of request, they will become liable for any Direct Debit collected under the DDI.
5. How long are Direct Debit
Instructions Valid?
Unless agreed otherwise*, banks will hold details of payer DDIs on file for a minimum period of 24 months. This is from the date of the last collection or from when the Direct Debit Instruction was first set-up if no collections have been made. After 24 months the DDI will no longer be active and an organisation will have to collect a new DDI to start/resume collections.
* It is possible for a service user to request a longer dormancy period but this must be agreed in advance with the sponsoring bank.
Contact us for help
If you have questions about the Direct Debit instructions – or any other aspect of the Direct Debit Scheme,
please Contact Us – we are very happy to help!