Can you wait 10 working days before you extract direct debit payments?

It hasn't received a lot of press, but the 2012 TCP Code introduces a rule that a telco has to wait 10 working days before it extracts funds under a direct debit arrangement. It's designed to allow customers plenty of time to check their bills and charges. It may seem a bit excessive, but the rule is in force already.

For some service providers, having to wait two weeks before they can extract payment will really hurt cashflow. But fortunately there are a couple of exceptions to the rule that can save the day.

The source of the rule is Chapter 5 of the Code, which requires that:

A Supplier offering Direct Debit facility must ensure that its Customers, or former Customers, can, on request, verify all Charges and Direct Debit authorisation details.

In support of that aim, it goes on to mandate a 10 working day waiting period before a telco actions its direct debit. But there are two, and possibly even three, ways to reduce that waiting time.

First exception: Fixed monthly DD payments

You can take advantage of this exception if:

  • There's a DD payment arrangement in place.
  • There's a fixed monthly charge to be extracted each month.
  • You and the customer have agreed (eg in your SFOA) that there's be no bill issued unless the monthly total is more than 110% of the fixed monthly charge.

If you want to make use of this exception to accelerate your payment, it's obviously desirable to have the '110%' agreement stated in your SFOA.

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About Peter Moon

A telco lawyer with a truckload of experience
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