Banks 'give bad advice' over card payment cancellations

A recurring payment, or continuous payment authority (CPA), is where a customer gives their long debit or credit card number to a company to take regular payments, most commonly for a subscription, club membership or insurance policy.

Findings from a Consumer Focus mystery shopping survey of nine major banks found almost half of advisers (44%) gave the wrong answer or couldn't give an answer when asked how to cancel this type of payment.

The survey found 28% of customers were told they could only take up their query with the company which had set up the CPA, which is contrary to Financial Services Authority (FSA) rules.

The FSA says in most cases, for ease, CPAs can be cancelled by telling the company taking payments from your account.

However, you can also cancel them directly with your bank or card issuer, without agreeing this first with the company taking payment.

BBC Radio 4's Moneybox also reported last week both Lloyds TSB and Santander failed to give some of their customers their legal right to cancel recurring payments.

Independent arbitrator the Financial Ombudsman Service says it receives a steady number of complaints about CPAs, with the main complaints being where customers never gave permission to set up the payment, and then faced problems cancelling.

'No-one takes responsibility'

Consumer Focus says some of the difficulties people face with CPAs include:

• Being passed between banks and businesses, with neither taking responsibility for cancelling a CPA.

• Businesses using CPAs to take additional charges. Consumer Focus is particularly concerned some payday loan companies may be doing this.

• Cancelled CPA payments taken on a cancelled card and debited on a new card linked to the same bank account, without the customer's permission.

• Confusion over what has been consented to, especially with shopper discount websites.

Earlier this year we reported a number of online shoppers have had unexpected continuous payments on bank and credit card statements, apparently set up without their knowledge (see the Beware costly subscriptions MSE news story).

Sarah Brooks, director of financial services at Consumer Focus, says: "Customers are naturally not experts on this payment method, so it is essential bank staff know the rules and give clear and accurate advice."

Chief ombudsman Natalie Ceeney says: "If you spot a payment on your account you don't recognise, let your bank or credit provider know as soon as possible. If you aren't able to sort things out the Ombudsman may be able to help."