Banks pay out for failure to cancel
Consumers whose banks and building societies fobbed them off when they tried to cancel recurring payments are in line for compensation payouts.
The Financial Conduct Authority (FCA) has reached an agreement with major high street banks and mutuals that they must trawl through their records going back to 2009 to look again at the complaints they have had after a customer asked for a payment to be cancelled, only to find this did not happen.
The agreement relates to a type of payment called a continuous payment authority (CPA), which are often used when people sign up to use the services of gyms, payday lenders, insurance companies and internet firms.
More than £7.5 billion-worth of payments are made through CPAs each year. They are automatic payments which work in a similar way to a direct debit, with consumers giving a supplier or retailer permission to take payments on their card.
The FCA has moved to act following concerns that, particularly in relation to payday loans, some banks and mutuals were not cancelling CPAs when asked to do so by their customers. Several charities have highlighted problems with payday loan firms using CPAs to drain people’s bank accounts of cash without warning.
Transactions made through CPAs are worth £45 on average, but for those relating to payday loans the typical amount rises to £80.
Research by Consumer Focus last year found that many bank staff were giving wrong advice to customers about how to cancel such payments and telling them that they could only take their cancellation query to the company which had set up the CPA, which is contrary to guidance set out by regulators.
Customers should be able to cancel the payments through their banks.
The agreement means that banks will look back at all their complaints going back to November 2009, when the FCA’s predecessor, the Financial Services Authority, began to regulate banking conduct.
The FCA believes an estimated 25,000 to 30,000 customers will be affected and banks will be looking through the complaints themselves to see who is owed money.
Dan Plant, head of editorial at consumer help website MoneySavingExpert.com, said: “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 obligated 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 kaiboshed since 2009, complain to your bank now.”
The Press Association
Latest posts by The Press Association (see all)
- 9 things you must know before colouring your hair at home - May 29, 2020
- 10 tips for greater productivity working from home - May 26, 2020
- How to dry home-grown blooms - May 25, 2020
- 10 ways to recycle old junk to use in the garden - May 22, 2020
- Here’s why you need zinc – and how to make sure you’re getting enough - May 22, 2020
Leave a Comment!
Community Terms & Conditions
These content standards apply to any and all material which you contribute to our site (contributions), and to any interactive services associated with it.
You must comply with the spirit of the following standards as well as the letter. The standards apply to each part of any contribution as well as to its whole.
be accurate (where they state facts); be genuinely held (where they state opinions); and comply with applicable law in the UK and in any country from which they are posted.
Contributions must not:
contain any material which is defamatory of any person; or contain any material which is obscene, offensive, hateful or inflammatory; or promote sexually explicit material; or promote violence; promote discrimination based on race, sex, religion, nationality, disability, sexual orientation or age; or infringe any copyright, database right or trade mark of any other person; or be likely to deceive any person; or be made in breach of any legal duty owed to a third party, such as a contractual duty or a duty of confidence; or promote any illegal activity; or be threatening, abuse or invade another’s privacy, or cause annoyance, inconvenience or needless anxiety; or be likely to harass, upset, embarrass, alarm or annoy any other person; or be used to impersonate any person, or to misrepresent your identity or affiliation with any person; or give the impression that they emanate from us, if this is not the case; or advocate, promote or assist any unlawful act such as (by way of example only) copyright infringement or computer misuse.
Nurturing a safe environment
Our Silversurfers community is designed to foster friendships, based on trust, honesty, integrity and loyalty and is underpinned by these values.
We don't tolerate swearing, and reserve the right to remove any posts which we feel may offend others... let's keep it friendly!