Consumers will be able to cancel regular payments from their bank account by contacting their card provider as part of a move to simplify the banking system and better protect consumers, the Financial Conduct Authority (FCA) has said.
Looking into Continuous Payment Authorities (CPA) – also known as recurring transactions or recurring payments – the FCA found that some banks had not been stopping payments when asked to do so.
It follows an FCA review into how the largest high street banks process requests to cancel such payments, which are commonly used for subscriptions or gym memberships.
CPAs are ‘relatively easy to set up but can be hard to cancel, causing problems for consumers trying to manage their finances,’ it said.
Banks have now agreed that a consumer request to end a recurring payment will be sufficient to cancel the arrangement, rather than the customer having to contact the merchant. Incorrect payments taken following cancellation will also be immediately refunded.
Banks are to review all individual complaints since November 2009 and award compensation to consumers whose payments continued despite them asking the bank to cancel them.
Clive Adamson, the FCA’s director of supervision, said the regulatory body had been working hard to improve everyday banking for the consumer.
“It’s important that consumers are confident that banks are meeting their everyday banking need. Today customers can be confident that when they ask for a Continuous Payment Authority to be cancelled – it will be cancelled – and that it can be done easily.”
