By Daniel Hunter
New Consumer Focus research shows that banks’ customer service advisers are unclear of the rules around Continuous Payment Authorities (CPA) and could be giving customers incorrect advice as a result.
The mystery shopping survey found that almost half of advisers (44%) gave the wrong answer or couldn’t give an answer, when asked how to cancel a CPA. This lack of clarity from the banks makes it difficult for consumers to know their rights around CPAs, which could be leading to payments being taken without the customer’s knowledge or consent.
A CPA is a type of regular automatic payment arrangement set up using a debit or credit card. Similar to a direct debit, consumers give a supplier or retailer permission to take payments on their card.
CPAs are favoured by many businesses, including payday loan providers, gyms, insurers, magazine companies and internet service providers. The timing and amount of the payment may vary. A CPA may also be called recurring payment authorities, recurring transactions or recurring payments.
Consumer Focus undertook mystery shopping among nine leading retail banks in order to test customer advisers’ awareness of how consumers should go about cancelling a CPA. The correct answer would have been to cancel the CPA through the bank, while also advising the supplier or retailer that the CPA was being cancelled.
The survey found only 56 per cent of customer service staff gave a correct answer, 44 per cent got it wrong or could give no answer at all. Worryingly, 28 per cent of customers were told they could only take their query to the company which had set up the CPA, which is contrary to Financial Services Authority guidance.
"CPA’s are a frequently used but little understood form of payment. Problems with cancellations are leaving consumers going overdrawn or paying for something they no longer want, which is unacceptable. Customers are naturally not experts on this payment method, so it is essential bank staff know the rules and give clear and accurate advice," Sarah Brooks, Director of Financial Services at Consumer Focus said.
"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."
Some of the difficulties consumers face with CPAs include:
- Being passed between the bank and business, with neither taking responsibility for cancelling a CPA. This can leave the consumer feeling their only resort is to cancel the payment card used
- Businesses are using CPAs to take additional charges over and above the payment for products and services being subscribed to, e.g. fees for debt recovery
- Cancelled CPA payments are being taken on a cancelled card and debited on a new card linked to the same bank account, without the customer’s permission.
- Consumer confusion over what has been consented to, particularly as agreements are made with no paper record of what was agreed and the terms are not obvious to the average consumer. This has been a particular issue with shopper discount and savings websites.
It is particularly important for consumers to contact their bank if they have any trouble contacting the business concerned or are in any doubt as to whether the company will carry-out the cancellation. Consumers will still need to pay any debt that is outstanding, but the company cannot require the customer to pay this through a CPA. The watchdog would also encourage any customer given the wrong advice about cancelling a CPA to log a complaint with the bank concerned.
To improve the problems consumers are facing with CPAs, Consumer Focus is calling for measures including:
- Clear and accurate information to be given to customers on CPAs, from bank customer service staff and on websites, especially around cancelling payments
- This advice must also make clear that any money taken from the customer’s account after the CPA is cancelled should be immediately refunded to the customer by the bank
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