London Institute of Banking & Finance (LIBF) Practice Exam 2026 - Free LIBF Practice Questions and Study Guide

Direct debits involve the recipient pulling funds from your account after you’ve authorised a mandate; because the payee can request different amounts each time, the payment sum can vary from one payment to the next. Standing orders, on the other hand, are you instructing your bank to make payments of a fixed amount on a set schedule, so the amount stays the same each time unless you change the instruction. This contrast is what the correct statement captures: direct debits can vary in amount, while standing orders are for the same amount each time.

Things that aren’t the main point include how you set them up—the process isn’t tied to a branch signing in today’s world, as you can usually set up online or by form—and the relative cost of setting them up, which isn’t a fundamental difference between the two. Use direct debits for regular payments that can vary (like utilities) and standing orders for fixed, predictable payments (like rent).