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Ash, Solicitor
Category: Law
Satisfied Customers: 10914
Experience:  Solicitor with 5+ years experience
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We have a direct debit scheme set up with HSBC, which they

Resolved Question:

We have a direct debit scheme set up with HSBC, which they are trying to take away from us because our turnover is not high enough to meet their current requirements. We have been operating this scheme for the last 3 years and our turnover with direct debits has increased over that time. This is going to cause a great deal of inconvenience to our customers and ourselves with administration, plus we could lose our customers who pay by direct debit (as they want the convenience). If we lost these customers, we would lose half our turnover and our business would fold.
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.

Alex Watts :

Hello my name is XXXXX XXXXX I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply as this is not an ‘on demand’ live service, but rest assured I will be giving your question my immediate attention upon return. There is no need to wait here, you will get an email when I reply.

Alex Watts :

Is there anything in the terms and conditions that states you must achieve a certain level please?


When the scheme was originally set up, we were within the parameters, but they have now changed those parameters

Alex Watts :

But does the terms specify a minimum turnover?

Alex Watts :

Or that they can change the minimum turnover requirement?


This is the wording from the document:

Application for sponsorship

The application of a prospective Originator must stand on its own merits.

It is the Sponsor’s duty to assess the suitability of the prospective Originator.

Consideration must include:

- contractual capacity.

- financial standing

- the quality of its administrative control

An Originator must have a registered address in the UK and a UK sterling

bank account. All communications in respect of the Scheme (including BACS

reports) will be posted to the UK registered address, or will be available to

download from BACSTEL-IP, if you are using BACSTEL-IP.

An Originator must complete and lodge an Indemnity with its Sponsor. An

Originator which is an overseas registered company, or which has its principal

place of business overseas, must provide legal opinion that the Indemnity

would be enforceable under the overseas jurisdiction and / or provide proof

of adequate assets within the UK jurisdiction.

The success of the application will not be influenced by the existence or

availability of any private insurance to cover an Originator’s Indemnity liability.

Third party support for the liability assumed under the Indemnity is

unacceptable to the Sponsor. However, in this context, the relationship

between parent and subsidiary companies is not deemed a third party

relationship, and may be taken into consideration for so long as it lasts,

provided an Indemnity has been given by the parent company.

Originators may in some instances hold an account with more than one

Bank. In such instances Originators will be sponsored by all the Banks with

whom an account is held for that OIN. Collected funds must be credited to

an account in the name of the Originator which must be held by the

Sponsor(s). Each Sponsor shall be responsible, without limit of time and

amount, for Direct Debits collected under the Originator’s account maintained

with it under that OIN.

Alex Watts :


Alex Watts :

Does it specify a minimum or that they can change the minimum requirement - I can not see that it says this?


No it doesn't and I have searched the whole document for the word "turnover" and it doesn't appear anywhere. There is also this wording from the contract about compulsory termination


13.2 Compulsory termination

In the event of an Originator causing significant problems for the industry as a

whole, leading for example to Paying Bank complaints to the Direct Debit

Scheme Steering Group, it will be given two written warnings through its

Sponsor.The first written warning will outline the general nature of the

problem occurring detailing the requirements to conform and a time period

for achieving conformity. Should the problem not be rectified within the

agreed period, a second written warning will be given further specifying the

nature of the problem, the requirements to conform and a further time period

for achieving conformity. In setting the time period, the Direct Debit Scheme

Steering Group will take into consideration the nature of the problem and the

extent of the activity required to achieve conformity. Should conformity not be

achieved within the time frames set out in the second written warning, the

Sponsor will report to the Direct Debit Scheme Steering Group who will in

turn report to the BACS Payment Schemes Ltd Board who will have the right

to instruct the Sponsor to terminate the Originator from the Scheme without

further notice.

An Originator will be removed from the Scheme if the BACS Payment

Schemes Ltd Board reasonably believes that:

– Direct Debiting operations are being carried out in a manner which

constitutes an abuse of the Scheme, affects the integrity of the Scheme or

Direct Debiting operations are being carried out without due regard to

the interest of Payers

– Where there is evidence that standards and procedures detailed in this

Guide are being deliberately ignored.

In extreme cases, the BACS Payment Schemes Ltd Board or the Sponsor

reserve the right to terminate an Originator’s participation in the Scheme at

short notice, notwithstanding the disruption which may occur. Every effort will

be made to give sufficient notice (minimum of 3 months) to enable an

Originator to make alternative arrangements. However, the giving of notice in

this context is not an obligation assumed by the BACS Payment Schemes Ltd

Board or the Sponsors and they cannot accept under any circumstances

liability for any loss, which an Originator may suffer as a result of termination

from the Direct Debit Scheme.

Should an Originator wish to appeal (“Appeal”) its termination from the

Direct Debit Scheme (howsoever caused), it must notify the BACS Payment

Schemes Ltd Board (“Notification”) within 14 days of receiving notice of its

termination from the Direct Debit Scheme.

Upon Notification, the BACS Payment Schemes Ltd Board will, by written

notice to the City Disputes Panel Ltd. (“the Appointer”) request the Appointer

to nominate an appeal panel (“Panel”) to hear and determine the Appeal.


The Panel shall consist of three individuals who, in the opinion of the

Appointer are suitably qualified members of or professional advisers to the

banking and/or financial services industry in the City of London and who are

also independent of the Originator, the Sponsor and the BACS Payment

Schemes Ltd Board.The Appointer may but shall not be obliged to consult the

Originator, the Sponsor or the BACS Payment Schemes Ltd Board before

nominating a Panel. Within 14 days following their nomination, the Panel shall

appoint one of their number to preside over the Appeal (“the Chair”).

The Appeal shall be a re-hearing of the original determination of the BACS

Payment Schemes Ltd Board or the Sponsor (as applicable) and shall be

conducted in accordance with such process as the Chair deems fair and

appropriate, (and so far as he/she is advised, in accordance with the Human

Rights Act 1998).

The Panel shall arrive at its decision by majority vote and the Panel’s decision

shall be final and binding on all parties to the Appeal.The Panel’s decision may

also include a ruling as to how the costs of the Appeal (including the

remuneration of the members of the Panel) shall be borne between the


Alex Watts : Then it's good news.
Alex Watts : There is no requirement for minimum turnover.
Alex Watts : Both you and the bank have a legally binding contract.
Alex Watts : It sets out the terms to which you both agreed.
Alex Watts : If it does not specify a minimum turnover requirement they can not impose one
Alex Watts : They can only act in accordance with the agreement.
Alex Watts : This sets out each parties rights.
Alex Watts : They can only terminate in accordance of the agreement.
Alex Watts : You should write and make a formal complaint. This will have to be investigated.
Alex Watts : Once you get their final response and if you are not happy with it then you can complain to the ombudsman.
Alex Watts : They are a free independent service and their website is,
Alex Watts : Can I clarify anything for you about this today please?

Where it says in extreme cases, does that refer to not complying with the scheme as in the paragraph above?

Alex Watts : Yes, I think that is an abuse of the system rather than low turnover.
Alex Watts : Does this help?

Yes thank you for your help.

Alex Watts : If this answers your question could I invite you leave feedback on my service which I hope has been excellent today, if you need more information or help then please click reply.Please remember that I am always happy to help if you have future questions, even if I am in Court I can normally respond within a few hours. For future information, please start them with ‘For Alex W’.Please bookmark my profile if you wish for future help:
Ash, Solicitor
Category: Law
Satisfied Customers: 10914
Experience: Solicitor with 5+ years experience
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