Advice Column – I have a payday loan being taken from my account by Continuous Payment Authority (CPA)
I have a payday loan being taken from my account by Continuous Payment Authority (CPA). I tried to cancel this as the deductions were high and I am in rent arrears. When I tried to do this the building society staff said that they were (physically) unable to cancel the CPA and that I had made an agreement with the payday loan company and should honour the agreement by finishing the payments. I am worried sick that I will lose my home if I cannot renegotiate lower repayments with the payday lender – but they won’t renegotiate whilst the CPA applies as they are getting their money.
If you agree that someone can take a payment from your credit or debit card at a future date, known as a continuous payment authority, you can cancel the payment before it is taken. This applies to:
- one-off payments, for example to pay back a payday loan
- regular payments, such as payments for a gym membership or magazine subscription
The rules about cancelling future card payments do not apply to card purchases for goods or services, such as in a shop or paying a hotel bill.
If you stop payments which relate to another agreement, such as a loan or to pay for a club or gym membership or a magazine subscription, you’ll need to make another arrangement to pay the money you agreed.
Stopping a card payment
The law says you can withdraw your consent and stop a future payment under a continuous payment authority at any time up to the end of business on the day before the payment is due.
To withdraw consent, simply tell whoever issued your card (the bank, building society or credit card company) that you don’t want the payment to be made. You can tell the card issuer by phone, email or letter.
Your card issuer has no right to insist that you ask the company taking the payment first. They have to stop the payments if you ask them to.
If you ask to stop a payment, the card issuer should investigate each case on its own merit. They should not apply a blanket policy of refusing to refund payments taken when the client gave their account number out.
You should point out to the card issuer that they should follow the Financial Conduct Authority (FCA) guidance available from the FCA Know your rights guide on the FCA website at www.fca.org.uk
Cancelling the payment by phone
If you phone, it’s a good idea to follow up the call in writing so you have proof of your instruction to cancel. But the company should take your phone call as the instruction and stop the arrangement straight away, not wait for you to confirm in writing.
If the person you speak to says you can’t stop the payments, ask to speak to someone more senior. If they still won’t stop the payments, ask them to put a record of the call on your account so you can refer to it later if you need to. Make sure you keep a note of the date, time and who you spoke to as well, in case you need to make a complaint.
If the card provider won’t stop the payments
If the card provider goes ahead and allows a payment to be taken when you ask them not to, you’re entitled to your money back. They’ll also have to cancel any interest and charges added to your account because they let the payment go through.
Getting your money back
If your bank, building society or credit card company doesn’t refund your money for a payment they shouldn’t have allowed, write and ask for your money back under the company’s complaints procedure.
If you’re still not satisfied, you can complain to the Financial Ombudsman Service.
You can contact the Financial Ombudsman Service helpline on 0300 123 9 123 or visit the website at: www.financial-ombudsman.org.uk.
Complaint to payday lender:
A payday loan is a short-term loan intended to tide you over until you get paid. Most payday loan lenders must follow a Good Practice Customer Charter. They also need to follow certain rules set down by the Financial Conduct Authority (FCA).This means they should check certain things and give you certain information before lending to you.
You can complain to the payday lender if, for instance, the lender didn’t set out clearly how continuous payment authority (CPA) works and your right to cancel it OR did not tell you in advance that they were going to take money from your account using the CPA.
When you’re making your complaint, there may be other things you can say about how the loan has affected your life which may affect the outcome of your complaint. For example, can you say:
- there are things you can no longer afford as a result of the loan?
- how the loan has affected your family life?
- you feel your debt is getting out of control?
- You can use a citizens advice template letter to help you make your complaint
- Get help making a complaint to the Financial Ombudsman Service – call 0300 123 9 123 or0800 023 4567
If you’re not satisfied with the response or they don’t get back to you within eight weeks, you can make a complaint to the Financial Ombudsman Service.
Other useful information
- The Financial Ombudsman’s website has useful information on how to make a complaint at:www.financial-ombudsman.org.uk
You should also seek advice immediately from a free, independent, quality-marked legal advice service, such as Citizens Advice, about dealing with all your debts and creditors. They will help you with a sustainable debt strategy and will deal with rent or mortgage arrears, council tax arrears, utility bills and criminal court fines as a priority.