Banks warn customers about Brexit disruption to direct debits

Bank of Ireland and Permanent TSB have sent more than 65,000 letters to customers warning them that direct debits for waste and household utility bills may not be processed because of Brexit.

Around 47,000 customers of Bank of Ireland have received letters telling them that direct debits for a handful of household service providers originate through a UK-based bank, and that unless those banks hold the customer's address, payments will not be made after Brexit on January 1st.

Permanent TSB has sent out about 20,000 letters. Other banks are planning similar communications.

Bank of Ireland told customers in letters urging them to “get Brexit ready” that from the end of the standstill Brexit transition period on December 31st, the UK will remain part of the Single European Payments Area (Sepa) but will no longer be a member of the European Economic Area.

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As a result to changes to data requirements for payments to and from the UK, British banks will be legally required to provide the address of the Irish customer to Irish banks when requesting payment on behalf of a service provider from their Irish bank account.

“After December 31st, 2020, where the required address is not provided, Bank of Ireland will not be able to complete the payment and release funds on your behalf,” the bank says in the letter.

“We recognise the potential to disrupt the current arrangements that you have with your service provider but unfortunately this is not something that we can resolve on your behalf.”

Many of the service providers that the bank has been writing to customers about are in the waste management sector and include Greyhound, Panda Waste, Mr Binman, Greenstar commercial, Oxigen and Allied Recycling.

Other affected service providers include the New York Times, energy company Panda Power, Cornmarket Group Financial Services and Deutsche Leasing Ireland.

Customers are being asked to contact their service provider to make sure they have the correct address for them and arrange to submit this to their bank for “onward processing”.

Banking and Payments Federation Ireland, the banking industry group, advised more than 150 businesses last month to “protect against consumers’ direct debit payments being rejected” from January 1st when Brexit comes into effect.

“We estimate at this point that over 80 per cent of impacted transactions meet the new requirements. However, our research indicates there is an outstanding volume of direct debits that still do not include the additional information required,” said the group.