Bayly was born at Woolwich on 28 September 1857. He was a great-grandnephew of Admiral Sir Richard Goodwin Keats. Bayly joined the Royal Navy in 1870. He served in the Third Anglo-Ashanti War in 1873 and against pirates in the Congo Basin in 1875. He later served on the armoured frigateHMS Agincourt and in the Anglo-Egyptian War of 1882. Bayly married in 1892 Yves Henrietta Stella, daughter of Henry Annesley Voysey; there was no issue of the marriage.
He was posted to the torpedo school HMS Vernon in late March 1900,[1] then on 15 July 1900 he was appointed Naval Attaché to the United States and Japan, serving as such until he was recalled in July 1902.
In December 1914, he was appointed to command the Channel Fleet, flying his flag in the predreadnought battleshipHMS Lord Nelson. Under Bayly's command, the 5th Battle Squadron spent 31 December 1914 in the English Channel participating in gunnery exercises off the Isle of Portland, supported by the Topaze-classlight cruisersHMS Topaze and HMS Diamond. After the exercises, the fleet remained at sea for the night on patrol even though German submarine activity had been reported in the area. With rough sea conditions and the wind increasing, submarine attacks would have been difficult to carry out effectively and so were not thought to be a significant threat. Nonetheless, the predreadnought battleship HMS Formidable was torpedoed and sunk by the German submarine U-24. Bayly was later criticised for not taking proper precautions during the exercises, but was cleared of the charge of negligence.