diff --git a/channeld/channel.c b/channeld/channel.c
index 215bccdfc..537d93752 100644
--- a/channeld/channel.c
+++ b/channeld/channel.c
@@ -1990,35 +1990,37 @@ static void handle_fail(struct peer *peer, const u8 *inmsg)
 	u8 *msg;
 	u64 id;
 	u8 *errpkt;
-	u16 malformed;
+	u16 failcode;
 	enum channel_remove_err e;
 	struct htlc *h;
 
-	if (!fromwire_channel_fail_htlc(inmsg, inmsg, NULL, &id, &malformed,
-					&errpkt))
+	if (!fromwire_channel_fail_htlc(inmsg, inmsg, NULL, &id, &errpkt,
+					&failcode))
 		master_badmsg(WIRE_CHANNEL_FAIL_HTLC, inmsg);
 
-	if (malformed && !(malformed & BADONION))
+	if ((failcode & BADONION) && tal_len(errpkt))
 		status_failed(STATUS_FAIL_MASTER_IO,
-			      "Invalid channel_fail_htlc: bad malformed 0x%x",
-			      malformed);
+			      "Invalid channel_fail_htlc: %s with errpkt?",
+			      onion_type_name(failcode));
 
 	e = channel_fail_htlc(peer->channel, REMOTE, id, &h);
 	switch (e) {
 	case CHANNEL_ERR_REMOVE_OK:
-		if (malformed) {
+		if (failcode & BADONION) {
 			struct sha256 sha256_of_onion;
 			status_trace("Failing %"PRIu64" with code %u",
-				     id, malformed);
+				     id, failcode);
 			sha256(&sha256_of_onion, h->routing,
 			       tal_len(h->routing));
 			msg = towire_update_fail_malformed_htlc(peer,
 							&peer->channel_id,
 							id, &sha256_of_onion,
-							malformed);
+							failcode);
 		} else {
+			u8 *reply = wrap_onionreply(inmsg, h->shared_secret,
+						    errpkt);
 			msg = towire_update_fail_htlc(peer, &peer->channel_id,
-						      id, errpkt);
+						      id, reply);
 		}
 		msg_enqueue(&peer->peer_out, take(msg));
 		start_commit_timer(peer);
diff --git a/channeld/channel_wire.csv b/channeld/channel_wire.csv
index 5f72ae1d4..190a9a7d5 100644
--- a/channeld/channel_wire.csv
+++ b/channeld/channel_wire.csv
@@ -92,11 +92,11 @@ channel_fulfill_htlc,,payment_preimage,struct preimage
 # Main daemon says HTLC failed
 channel_fail_htlc,1006
 channel_fail_htlc,,id,u64
-# If malformed is non-zero, it's a BADONION code
-channel_fail_htlc,,malformed,u16
-# Otherwise, error_pkt contains failreason.
+# If this is non-zero length, you need to wrap this and pass it on.
 channel_fail_htlc,,len,u16
 channel_fail_htlc,,error_pkt,len*u8
+# If it errcode is != 0, it's a local error, otherwise we're passing thru.
+channel_fail_htlc,,errcode,u16
 
 # Ping/pong test.
 channel_ping,1011
diff --git a/lightningd/peer_htlcs.c b/lightningd/peer_htlcs.c
index 14161830b..514a7877b 100644
--- a/lightningd/peer_htlcs.c
+++ b/lightningd/peer_htlcs.c
@@ -99,18 +99,13 @@ static void fail_in_htlc(struct htlc_in *hin,
 		subd_send_msg(hin->key.peer->owner,
 			      take(towire_channel_fail_htlc(hin,
 							    hin->key.id,
-							    hin->failcode,
-							    NULL)));
+							    NULL,
+							    hin->failcode)));
 	} else {
-		u8 *reply;
-
-		/* This obfuscates the message, whether local or forwarded. */
-		reply = wrap_onionreply(hin, &hin->shared_secret,
-					hin->failuremsg);
 		subd_send_msg(hin->key.peer->owner,
 			      take(towire_channel_fail_htlc(hin, hin->key.id,
-							    0, reply)));
-		tal_free(reply);
+							    hin->failuremsg,
+							    0)));
 	}
 }