Bank failed to cancel regular payment? Claim cash now

The Financial Conduct Authority, which made the announcement today, has also ordered banks and building societies not to shirk their clear responsibility to cancel these payments when asked by customers (see our Recurring Payments guide for info on your rights).

Its investigation found many banks and building societies failed to cancel payments when asked. Instead, customers were often told to contact the retailer in question, which was simply wrong.

These payments are officially called Continuous Payment Authorities (CPAs). You give the long card number to an organisation (not your sort code and account number), to take regular payments via your card.

They are often used for gym memberships, insurance renewals, payday loans, magazine subscriptions, porn channels and more.

CPAs are different to direct debits, where you give your sort code and account number to make payments, and standing orders, which you set up yourself from your bank account.

How far back can I claim?

The redress only applies to payments cancelled since November 2009. This is when the Financial Services Authority (FSA), the FCA's predecessor, began regulating banking conduct. It doesn't matter when the payment was first set up.

How to claim your money back

Banks and building societies have agreed to review every complaint received about the non-cancellation of a CPA. They've also agreed to pay redress where payments have continued to be made, despite the customer cancelling the arrangement.

Crucially, it's also important to make a new complaint, if not done already, if you've had money wrongly taken after asking your bank or building society to cancel a CPA.

Dan Plant, head of editorial at MoneySavingExpert.com, says: "This scandal has been allowed to fester and grow for too long – it's high time banks were forced to cancel these payments when asked, as they have been obliged to for years.

"People have a legal right to cancel recurring payments, but banks have fobbed them off either because of incompetence or something worse.

"If you've had a request to cancel a payment kiboshed since 2009, complain to your bank now – the FCA is making them pay back all the money owed."

If your complaint is rejected you can take your claim to the free Financial Ombudsman Service.

What will I get back?

The redress aims to put customers back in the position they would have been if the bank had taken action when first asked.

So they should get the extra payments taken after they tried to cancel the payment, plus any interest charged on those payments.

If you had a £30 a month gym contract, and found yourself charged for three more months after cancelling, then you should get £90 plus any interest charged on that £90.

What if I'm in contract or genuinely owe a company money? Can I still cancel and get money back from my bank or building society?

If you cancel a payment mid-contract, say, if you are tied in for a few more months to a gym membership, it is unlikely you will get any money back. You need to be outside a contract to qualify for redress.

However, by the letter of the law, the bank should have cancelled a CPA in that circumstance, in which case the dispute would be between you and the gym.

What if I cancel a CPA in future?

Quite simply, the bank or building society must cancel it if you ask.

Banks and building societies have also confirmed that should a payment go through by mistake once a customer has cancelled it, then that customer will be refunded immediately.

Customers can also cancel a CPA with the merchant as well as with their bank, but the bank cannot use that as a reason not to cancel it if asked.

You are still responsible for any money genuinely owed if you cancel a CPA.