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The Direct Debit Scheme in Ireland is administered and governed by the Irish Retail Electronic Payments Clearing Company Ltd. (IRECC). The Scheme has over 4,000 Originators who process over 100 million direct debits every year. There are new Originators joining every month and there is a very steady increase in the volume of transactions. The key players in the scheme are the Sponsoring Banks, Originators, Paying Banks and, most importantly of all, the Payer.

Each of the players has an important role to play in ensuring that the soundness and integrity of the scheme is maintained and that Payers have a high level of trust and confidence when signing up for direct debit. The key responsibilities of each of the players and also the rights of the Payer are outlined below.

The governance and administration role of IRECC in relation to the Direct Debit Scheme encompasses the following:

• Developing and maintaining the Scheme, and ensuring as far as practicable that the overall Scheme offers a high standard of efficiency, trust and integrity
  
• Monitoring and updating, as necessary, the rules of the Scheme
• Communicating requisite information regarding the Scheme to banks
• Issuing Originator Identification Numbers (OINs), maintaining a database of OIN information, and regularly updating the banks on changes to that database
• Seeking to resolve to the extent practicable, disputes or complaints received regarding the conduct of banks or Originators under the Scheme
• Providing a dispute resolution forum and/or service as required when a dispute arises regarding the conduct of banks or Originators under the Scheme
• Communicating directly with an Originator in breach of the rules of the Scheme
• Handling non-compliance with the Direct Debit Scheme Rules

What is a Direct Debit Originator?

An Originator is a company or organisation that is authorised by you to collect direct debits directly from your bank account. Typically Originators will be utilities such as electricity, gas and telephone, or other examples such as financial institutions, clubs and associations.

What is a Direct Debit?

A direct debit is a safe and convenient method of making payments and is ideally suited for regular payments with variable amounts such as utility bills, insurance payments, mortgage or loan repayments and subscriptions.

The payment is made by the Payer’s bank to the Originator to whom the payment is due. The Payer authorises the Originator to collect the payment from the Payer’s bank account by completing a Direct Debit Instruction or by giving the same instruction over the phone. If the Instruction is given over the phone, the Originator must confirm the details in writing to the Payer.

Once the Payer has returned the Instruction to the Originator, the Payer takes no further action.

The Collection of a Direct Debit

The Originator will inform the Payer in advance of the amount and date of the collection. The minimum advance notice is 14 days unless the Originator and Payer agree a shorter period. The notice can take the form of an invoice or a one-off notice detailing a series of payments over a period of time.

The Originator will electronically forward the direct debit to the Payer’s bank, who will make the payment provided there are sufficient funds in the Payer’s account, the account accepts direct debits and the instruction has not been canceled by the Payer.

The Payer can cancel or amend the Direct Debit Instruction at any time by informing their bank in writing. They should also inform the Originator. Please click here for a sample cancellation letter. All correspondence should be retained.

The Payer’s bank will then inform the Originator of the cancellation or amendment.

If the instruction is cancelled no further collections are permitted.

If it is established that an unauthorised direct debit was charged to a Payer’s account a prompt refund is guaranteed by the Payer’s bank. An Indemnity Claim is a claim made by the Payer’s bank in respect of an unauthorised direct debit being applied to its customer's account.

Responsibilities of the Key Players

Sponsoring Banks Must:

• Ensure that Originators are aware of and comply with the Scheme Rules
• Ensure that direct debit files are processed in accordance with agreed procedures and time frames
• Ensure that Indemnity claims are promptly resolved
• Take appropriate action with Originators who are not complying with the Rules

Originators Must:

• Ensure that the correct advance notice is issued to customers (Payers). For some Originators who are members of the Direct Debit Plus Scheme the default notice period is seven days
• Ensure that the Originator’s Reference Field is populated in accordance with the rules – the first six digits are static for the life of the Direct Debit (it is strongly recommended that this field should be unique to your customer and never change)
• Ensure that the correct transaction codes are used with all collections as follows:

• Ensure that disputed amounts are not debited
• Ensure that all amendments and cancellations are actioned promptly
• Ensure that all indemnity claims are settled within 10 days
• Ensure that all other responsibilities of the Originator under, or pursuant to, the Scheme are adhered to.

Paying Banks Must:

• Only pay direct debits in accordance with customers’ Instructions
• Ensure that unauthorised and/or cancelled direct debits are intercepted and returned immediately on presentation
• Promptly refund customers for indemnity claims and present the Indemnity to the Originator
• Assist customers in resolving disputes with Originators
• Inform the Sponsoring Bank if an Originator is not adhering to the Scheme Rules

The Rights of the Payer

• If you authorise payment by direct debit, then
• The Originator will notify you in advance of the amounts to be debited to your account
• Your Bank will accept and pay such debits, provided that your account has sufficient available funds
• If it is established that an unauthorised direct debit was charged to your account, you are guaranteed a prompt refund by your Bank of the amount so charged where you notify your Bank without undue delay on becoming aware of the unauthorised direct debit, and in any event no later than 13 months after the date of debiting of such direct debit to your account
• You are entitled to request a refund of any variable direct debit which exceeded the amount which you could reasonably have expected, subject to you so requesting your Bank within a period of 8 weeks from the date of debiting such direct debit to your account
• You can instruct your bank to refuse a direct debit payment by writing in good time to your Bank
• You can cancel the Direct Debit Instruction by writing in good time to your Bank

Best Practices for Direct Debits

• Always check that the amount collected tallies with your advance notice
• Pick a date in the month that suits best for collections - most Originators offer this service
• Keep a copy of any correspondence relating to queries or disputes
• Write to your Bank if you want to cancel the Instruction
• Understand the Direct Debit Guarantee and the protection it provides you
• Cancelling a Direct Debit Instruction does not in any way alter an agreement you have in place with the Originator, and does not in any way impact on any liability you may have incurred for goods and/or services received