Reducing Direct Debit indemnity claims (DDICs) should be a priority for organisations. Bacs have identified a few best practice tips that, when applied in conjunction with the DDIC challenge process, may help your organisation reduce claims:
1. Use a robust verification process
Better verification directly correlates with fewer DDICs with reason code 5 (No instruction), so ensure your verification process is as strong as possible. Robust verification has other benefits beyond reducing DDICs, for example, achieving a higher certainty of Direct Debit Instruction (DDI) set up
2. Make the collection name recognisable
Ensure the name of the collecting organisation appearing on the payer’s statement is as clear and recognisable to them as possible. For example, are they made fully aware at the point of sale that the Direct Debit may be collected by a third party? This should help reduce DDICs with reason code 5 (No instruction)
3. Offer a wide choice of advance notice channels
Consider widening the choice of delivery methods available to your customers. Many organisations only use post and / or email, however, your customers may prefer other channels. By offering them a range, they can select the channel that best suits them. A wider choice of advance notice channels correlates with a reduction in DDICs with reason code 2 (No advance notice)
4. Consider complexities around billing amounts
The collection amount must match the advance notice, so consider any practices which might confuse (such allowing part payments or surcharges). To reduce the number of DDICs with reason code 1 (Advance notice differs) ensure your customer understands exactly what amount will be collected and when.
Download a copy of Bacs’s DDIC best practice fact sheet.
The Little Bacs Guide to Minimising Direct Debit indemnity claims is also available on the Bacs website and will aid your understanding of when indemnity claims can occur, when they can be challenged, and how the chance of receiving them might be reduced.
A best practice video, that includes information and best practice about Direct Debit indemnity claims, and also the Direct Debit Guarantee, is also available on the Bacs website.
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