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Confusion reigns over Continuous Payments

Confusion reigns over Continuous Payments

Category: Money

Updated: 02/05/2012
First Published: 02/05/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Consumers are being forced to go overdrawn or be charged for something they no longer want because of confusion over Continuous Payments, it has been found.

A Continuous Payments Authorities (CPA) is a type of regular automatic payment arrangement set up using a debit or credit card that is favoured by many businesses, including payday loan providers, gyms, insurers, magazine companies and internet service providers.

Under the terms of CPAs, customers should be allowed to cancel the payments by going directly to their bank, although it is also advised that suppliers or retailers are also informed of the cancellation.

However, research conducted by Consumer Focus has found a worrying level of confusion over CPAs amongst bank staff.

The advice of staff at nine banks was sought, but only 56% of customer service staff gave the right answer.

Forty-four per cent got it wrong or gave no answer at all, with 28% of customers told they could only take their query to the company which had set up the CPA, which is contrary to advice from the Financial Services Authority.

Sarah Brooks, director of financial services at Consumer Focus, said the lack of understanding around payments are leaving customers at risk of going overdrawn or being charged for something they no longer want.

"Customers are naturally not experts on this payment method, so it is essential bank staff know the rules and give clear and accurate advice," she added.

"Consumers should be clear that they can cancel a CPA simply by contacting their bank. Ideally the customer should also contact the business involved– but crucially they do not need the company to cancel the CPA for them."

Consumer Focus is calling for far clearer information on CPAs, including accurate guidance from bank staff and on websites, especially around cancelling payments.

It added that any advice must make clear that funds taken from customer accounts after a CPA is cancelled should be immediately refunded by the bank.

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