Payday loans and CPAs

Posted by Paula, CCAB.

Updated 1232 days ago in: Information Sharing

Money Matters

People who take out a payday loan are likely to set up repayments with their debit card details. The agreement they sign to allow this to happen is known as a "continuous payment authority" (CPA). It gives the company the power to take money out of an account via a debit card. A CPA is not the same as a direct debit and up to 2009 could only be cancelled by the company in whose favour it was set up.

However, since 2009 banks MUST stop payments if requested. In June 2013 The Financial Conduct Authority, found many banks and building societies failed to cancel payments when asked, telling customers they would have to contact the retailer to cancel. The Financial Conduct Authority says:

"You have the right to cancel them directly with your bank or card issuer by telling it you have stopped permission for the payments. Your bank or card issuer must then stop them – it has no right to insist that you agree this first with the company taking the payments."

If you asked them to cancel and they didn’t, you can now reclaim any payments made since you requested cancellation.

Further info can be found here: