The FCA has been looking into how easy it is for customers to cancel Continuous Payment Authorities (CPAs) due either to payday lenders or for other regular payments such as subscriptions or gym memberships. CPAs, which are also commonly called recurring transactions or recurring payments, are relatively easy to set up but can be hard to cancel, causing problems for consumers trying to manage their finances. The issue has also been a concern for consumers, consumer groups, and the media.
Now, following the FCA review of how the largest high street banks and mutuals process requests to cancel CPAs, they have agreed that they will ensure that when a customer asks for a recurring payment to end - that will be sufficient to cancel the arrangement. They have also confirmed that should a payment go through by mistake following cancellation by a customer the customer will be refunded immediately.
The FCA noted that, particularly in relation to payday loans, some banks and mutuals were not cancelling CPAs when asked to do so. However banks and mutuals must cancel a payment themselves and not require their customer to contact the merchant to cancel the CPA.
In addition to securing this commitment, the largest banks and mutuals have agreed to review every individual complaint they have received about the non-cancellation of a CPA and to pay redress where payments have continued to be made despite the customer cancelling the arrangement. This applies to all complaints since November 2009 when the Financial Services Authority (FSA), the FCA’s predecessor, began regulating banking conduct.
In this way the FCA is putting the interests of consumers at the heart of a process many of them will use on a frequent basis. The FCA is committed to protecting their rights and getting meaningful outcomes.
"Recently we secured an agreement for banks to use a same day re-try process, and this is another example of improvements we are making to customers’ experience of their everyday banking.
"It’s important that consumers are confident that banks are meeting their everyday banking needs. Today customers can be confident that when they ask for a Continuous Payment Authority to be cancelled – it will be cancelled - and that it can be done easily.
"We recognise that historically this is an area where some customers have struggled but the banks and mutuals have responded positively to our work on this issue. From now on we expect them to be getting this right. In addition, they have committed to review past complaints.
"We have also been talking to organisations like Citizens Advice to understand how this affects consumers and have worked with the firms concerned to achieve improvements. Today’s announcement will give consumers more control over their finances and expenses."
Customers can generally cancel a CPA with the merchant as well as with their bank, although they are still responsible for any money they owe. The FSA became responsible for the rules around cancelling CPAs in November 2009 with the introduction of the Payment Service Regulations; under the rules banks must cancel any CPA so long as properly instructed to do so by the customer.
The FCA has further information on its website about consumers’ rights in relation to bank accounts.
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