Commentary: In favour of a direct approach

Hailed by banks and utilities as a success story, direct debits are still viewed with suspicion. BACS, the UK bank and building society body that processes the automatic payments, is launching a multi-million pound campaign this spring to clear up misconceptions about direct debits - a welcome move but overdue.

Direct debits are authorisations from bank or building society customers to pay their regular bills automatically as they fall due. About half of UK adults use them, and one billion were processed last year.

But many people are wary of them. Users complain of payments debited too early, utilities refusing to lower the amount deducted to reflect reduced usage, and bank errors that throw them into overdraft.

What really puts off the unconverted is that direct debits appear to take power over their bank account away from the customer and give it to the utility or insurance company getting the payment.

Banks and building societies say that, on the contrary, the customer is in the driving seat and can cancel direct debits at any time. Suppliers must give 14 days' warning of changes in the amounts or dates of the debit, and customers are covered by a money-back guarantee from the bank.

Utilities, insurance companies and banks want people to use direct debits, because it saves them money to move funds electronically rather than handling cheques or cash. But until they get the message across more clearly to the people the service is intended for, it looks as if the benefits are a little lop-sided.