BANK REFUNDS DUE TO 30,000
The new regulator the Financial Conduct Authority has stepped in to confirm
advice given in this column last year that banks and card providers must cancel
a payment as soon as you tell them to do so. The regulator estimates that 30,000
people who have been misled by a bank or card provider since 1 November 2009 can
claim a refund and compensation.
The issue is over recurring payments – sometimes known as Continuous Payment
Authorities or CPAs. It is very easy to agree to a firm taking money from your
current account or credit card just by giving them the debit or credit card
number – usually over the internet or on the phone. Once you have done that the
firm can take money out of your account forever. Sometimes it is a scam – you
sign up for a free or cheap sample of a product only to discover you authorised
a monthly membership fee. At other times it is the way a firm such as a gym or
loan company takes the money you owe them.
In the past banks have said that if you change your mind you must get the firm
to stop taking the money. But since 1 November 2009 the law has been very clear
– if you tell the bank or card provider to stop the payment it has to obey your
instruction. And if it does not then it has to refund the money it took from you
in full. It is then up to the bank to try to recover that money from the firm
that dipped in and helped itself.
Even though the law was changed nearly four years ago – and I reminded people of
that in this column twice last year – banks and card providers have a dreadful
record of following the rules. Excuses include ‘you must tell the firm first’
‘we cannot cancel it without the firm agreeing’ ‘it doesn’t apply to finance
companies’ and ‘it was just a one-off so it is not a recurring payment’.
All of those reasons are nonsense. The card provider must cancel any payment you
authorised as soon as you tell it to do so. And if it has failed to do so in the
past it must reimburse you for payments made after that instruction was given.
Interest at 8% will normally be added.
If your bank is difficult put in a formal complaint and if that is not resolved
within eight weeks take your complaint to the Financial Ombudsman Service
Continuous Payment Authorities are different from standing orders or direct
debits. You have always been able to cancel those just by telling your bank.
Remember that you may still owe the firm the money even if the payment is
stopped.
The FCA statement
http://www.fca.org.uk/news/continuous-payment-authorities-your-right-to-cancel
The Financial Ombudsman Service
http://www.financial-ombudsman.org.uk/consumer/complaints.htm
My updated blog post http://goo.gl/1f8SN
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