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Recurring payments now easier to cancel

Banks obliged to cancel CPAs upon customer request

If you have set up a regular payment from your account, you will now be able to successfully cancel the arrangement by contacting your card provider, the Financial Conduct Authority (FCA) has announced.

Continuous payment authorities (CPAs) – also called recurring transactions or recurring payments – are automatic payment arrangements whereby customers allow regular payments to be taken from their debit or credit card. While relatively straightforward to set up, they can be tricky to cancel.

Payments of over £7.5 billion are made each year through CPAs with each transaction worth on average £45, although for payday loans the average is £80.

Continuous payment authorities: cancellation problems

The FCA has been reviewing how easy it is for customers to cancel continuous payment authorities for regular payments such as subscriptions or gym memberships, as well as payday loans. During its investigation, the FCA found that some banks and mutuals were not cancelling CPAs following customer requests, despite the fact that they are obliged to do so.

These findings support the results of a Which? Money investigation carried out earlier this year. We made 60 calls to banks and credit card providers to test their staff’s knowledge of the rules relating to CPAs. Unfortunately, in two thirds of cases, we found debit and credit card companies were failing to abide by the Payments Services Regulations of 2009, which require card providers to cancel CPAs.

Following the FCA review, the largest high street banks and mutuals have agreed that they will cancel a CPA following a customer request, without asking them to contact the original merchant.

Banks to pay redress for non-cancellation of CPAs

The largest banks and mutuals have also agreed to review every complaint they have received since November 2009 about the non-cancellation of a CPA, and to pay redress where payments have continued to be made despite the customer having cancelled the arrangement.

Clive Adamson, the FCA’s director of supervision, said: ‘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.’

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