Once a completed Direct Debit Instruction is returned to a collecting organisation, advance notice must be given of the Direct Debit that is to be collected. As with the DDI, advance notice letters must be Scheme compliant and the formats being used must have been approved by the sponsor bank.
The bank account holder must receive an advance notice when:
Signing up to pay by Direct Debit
Changes are made to the amount previously advised, or
Changes are made to the Due Date previously advised
Providing Advance Notice is necessary to remain scheme compliant but it is important for other reasons as well, i.e. it allows payers to budget for the collections and question a collection before it is debited from their account. Failure to provide advance notice in these situations increases the likelihood that collections will fail (as there may not be sufficient funds in the account). It could also lead to customers cancelling Direct Debits because they believe the wrong amount has been collected or the payment has been collected incorrectly and it can affect the perceived professionalism of the organisation. It could also lead to an increased likelihood of indemnities being raised by dissatisfied customers. (More information in the Indemnity Claims section)
The notice period for advance notice is most commonly 10 working days plus postal time. This is the default that every organisation starts with although it is possible to agree different advance notice periods with the bank. Depending on your business, different lengths of time may be more / less appropriate, i.e. if you are a Boarding School, perhaps you would prefer to let parents know the amount to be collected for term fees for September, before the end of the summer holidays and therefore require a longer advance notice.
Collection must occur on or within 3 working days after the agreed date. Please note, this is 3 working days, i.e. does not include Bank holidays or weekends. If for any reason a collection run is unable to take place at the allocated time due to system failure or staffing issues, Bacs allow 3 working days as a reasonable time period within which the collection can then be taken. If the collection cannot be made in this timescale then a new advance notice must be issued.
Advance notice can be provided in a number of different ways.
- Invoice or statement
- Payment schedule
The advance notice can be provided in hard copy or any electronic format, provided all of the mandatory inclusions are present: