Actioning broken voluntary deduction (direct debit) arrangements 107-05040020

Voluntary deduction (direct debit) payments appear on the Repayment History (OPRH) screen on the day it was due to be deducted from the customer's financial institution account. The payment will reverse if the direct debit is dishonoured by the customer’s financial institution. It will show as a negative payment on the OPRH screen approximately 3 days later.

This will trigger:

• the status of the arrangement to change from current (CUR) to broken (BKN)
• a DMN/RCV Broken arrangement activity to generate
• a Direct Debit Declined letter to be issued
• the activity will assign via Customer First Workload Manager (CFWLM)

Review a customer's record when actioning a broken arrangement. Make reasonable effort to contact the customer to find why they were not able to maintain the payments.

Consider other payment methods when there is evidence of a poor repayment history. If the customer cannot maintain direct debit payments, BPAY can be a better option.

Cease the broken recovery arrangement if there are no determined debts on the file that need follow up action or after reasonable effort to contact the customer has been made.

Review a customer's record when talking about a new arrangement. Refuse the arrangement where customers:

• manipulate the system to avoid paying their debt
• make new arrangements to avoid other recovery action. For example, making a repayment arrangement to avoid a tax garnishee

Check repeated broken arrangements made at the same time each year. An arrangement may be appropriate once Australian Taxation Office (ATO) has processed the customer's tax return.

Direct debits remain in place until cancelled. If a customer wishes to cancel or defer a direct debit payment, they must:

• notify debt staff in Payment Assurance Operations (PAO) teams
• give at least 5 business days before the next deduction

Do not code a new arrangement if a customer advises there were insufficient funds in their account for the deduction unless:

• the dishonoured payment is recorded, and
• the direct debit is BKN

This prevents the dishonoured payment breaking the new arrangement.

If a direct debit falls on a non-business day, the payment will occur on the next business day.

Be mindful of weekly arrangements over extended public holiday periods. Financial institution dishonoured payments may not be received before the next scheduled payment is due. For example a direct debit due Good Friday would not occur until Tuesday as Monday is a public holiday. The financial institution would not process the dishonoured payment until Wednesday. Services Australia will not receive advice until after the next scheduled payment has been requested.

The first dishonoured payment will change the arrangement status to BKN and create a DMN/MFU follow up activity. However, if the second payment is honoured by the financial institution, the arrangement will return to a CURrent status. The DMN/RCV broken activity can be CANcelled as the arrangement is now CUR.

Interest charges apply when a customer misses a payment under an agreed payment arrangement. Interest is charged each day from the day after the last expected repayment was due and will cease when:

• the total debt amount and any calculated interest is paid in full
• the customer makes up the missed payment and continues to make agreed payments
• the agency agrees to skip the missed payment and the customer continues to make agreed payments
• the customer enters into a new acceptable recovery arrangement and makes their first agreed payment
• the customer has a reasonable excuse exemption applied, or
• the customer has at least one debt temporarily written off or has a pause on debt recovery in place

See Interest Charge (IC) for Centrelink debtors no longer receiving payments.