A standing order is an instruction you give to your bank or building society to authorise a payment for set amount, usually on a regular basis, to be made to another UK bank or building society account. On the day specified, your account will be debited and the money transferred to the person or business receiving the money.

What would I use this for?

  • Standing orders are typically used when you want to pay a person or business a set amount on a regular basis. It can be made to any UK bank or building society account. Standing orders are typically used to make rent payments, pay magazine subscriptions, monthly charity donations or if you want to make a regular payment into a savings account. A standing order amount remains the same, unless you amend your instruction.

How do I use it?

  • You will need the account name, sort code and bank account of the person or business you want to pay. You will need to provide these details to your bank or building society.
  • You may also be asked to provide a reference so that the recipient will know what the payment relates to.
  • To ensure your payment is processed correctly it is extremely important that you provide the correct sort code and account number.
  • Any person or company with a current account can set up a standing order either online, over the phone or at a bank branch. They are set up for a set period of time (e.g. every month for a year) or until they are cancelled. There’s no charge for setting up a standing order but be aware that if a standing order payment makes you go overdrawn you may be charged interest.
  • From January 2012 the money will be transferred through through the Faster Payments Service. Until this it may have been processed via Bacs which meant it arrived with the recipient within three working days, e.g. for a standing order initiated on a Monday, it would arrive on the Wednesday. However, standing orders processed via Faster Payments will be processed on the same day.

Security

  • When you set up a standing order it is vital that you give the correct sort code and account number and name of the person/business you want to pay. If you give incorrect details your money may end up in someone else’s account and it may be difficult to get it back.
  • Consumer protection providing immediate refund will apply if you are an innocent victim of fraud – for instance if a fraudster made an standing order payment from your account. Your claim needs to be made within the 13 months of fraudulent transaction leaving your account. Payments require your authorisation in advance and your bank must tell you what information the payment will be processed on (e.g. account number and sort code). If you give the correct information and your payment goes astray your bank must make immediate efforts to trace the transaction and notify you of the outcome. In this case the transaction will be refunded. If you give incorrect information and the payment goes astray your bank must make ‘reasonable efforts’ to trace the transaction but may charge for doing so. However, they have no liability for getting the funds back. Claims must be made within 13 months.

Useful information

  • If paying a business, it is usually best to opt for a Direct Debit where possible as it offers better consumer protection.
  • You should always be careful to check the sort code and account details are correct for your payment you want to send.
  • Standing orders are different to Direct Debits as a standing order authorises the customer’s bank to send the money. A Direct Debit authorises the beneficiary to collectthe money from your account. Also with a Direct Debit the amount can vary but with a standing order it remains the same, unless you amend your instruction.
  • Account holders usually need to be 16 or 18 to use standing orders, but some accounts for younger people also offer standing order facilities, so check with your bank or building society.

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