Credit card payment cancellations: banks fail testConfusion over continuous payment authority rules

02 May 2012

Your bank must cancel your recurring payments if you ask them to

44% of bank advisers are unable to tell customers how to cancel a continuous payment authority on their credit card, according to a new Consumer Focus study.

Continuous payment authority

A continuous payment authority (CPA) is an automatic payment arrangement where customers allow regular payments to be taken from their credit or debit card, in the same way that direct debits are taken from their bank account. These are also known as recurring payment authorities, recurring transactions or recurring payments.

Until recently, some consumers have experienced difficulty in cancelling continuous payment authorities, being told, mistakenly, that only the payee can end the arrangement. In many cases firms will respect a customer's wish to cancel, but in cases where they are in dispute, or don't respond to requests of this kind, consumers have faced a long struggle to stop payments being taken from their card.

Customer's right to cancel credit card payments

The Payment Services Regulations of 2009 give consumers the right to cancel a continuous payment authority. Financial Services Authority (FSA) guidance is explicit, stating that, 'In most cases, regular payments can be cancelled by telling the company taking the payments. However, you have the right to cancel them directly with your bank or card issuer by telling it that you have stopped permission for the payments. Your bank or credit card issuer must then stop them – it has no right to insist that you agree this first with the company taking the payments.'

Despite this, BBC Money Box recently found evidence that customers had been wrongly advised by LloydsTSB and Santander. Both banks apologised and promised to issue new guidance to staff. The need for this is underlined by research from Consumer Focus, which found only 56% of customer service staff were able to give correct advice on how to cancel a continuous payment authority.

Sarah Brooks, director of financial services at Consumer Focus said: 'CPAs are a frequently used but little understood form of payment. Problems with cancellations are leaving consumers going overdrawn or paying for something they no longer want, which is unacceptable. Customers are naturally not experts on this payment method, so it is essential bank staff know the rules and give clear and accurate advice.'

More on this...

  • Have you been caught out by a CPA? - have your say on Which? Conversation
  • - where you stand when things go wrong with a purchase
  • Credit cards - we review the whole market to find the best credit cards