CPAs involve us giving a merchant permission to charge our card for a specific service or product each month by giving them the card number.
Cancelling a CPA with the retailer should be straightforward, but if they refuse to help, our bank or card provider should step in to cancel the payment.
If the card provider is unhelpful, complaints can be escalated to the Financial Ombudsman Service for a final resolution.
How to stop recurring payments
A recurring or continuous payment, also known as continuous payment authority (CPA) or recurring transaction is a charge applied directly to our debit or credit card on a regular basis.
Subscription services and payday loan companies often use CPAs to take regular payments because it's less complicated than creating Direct Debits or standing orders.
It also cuts out the middle man and is an agreement directly between the customer and the merchant rather than the customer, bank and merchant.
Theoretically, cancelling recurring payments should be straightforward, yet there are still circumstances where we might be told by card providers or bank staff that we cannot cancel them.
Here's the process to follow to understand what's going on with recurring payments and how to get providers to cancel them.
1. Check what you agreed to
When an individual signs up for a recurring payment, they're authorising a company to take money from their bank account.
It really is that simple: once the company has that authorisation they can take payments whenever they please - and for unspecified amounts.
The typical recurring payment relies on the company asking for the most prominent number on your card, the long one across the middle. They'll ask for the card's expiry date and security code, but they won't necessarily specify a date for payments to be taken.
Anyone who signs up to make payments in some other way - by providing sort code and account number, or sending a form to your bank, for example - probably has a different form of regular payment on their hands: a Direct Debit or a standing order.
Assuming you did sign up for a recurring payment, the next step is to contact the retailer directly.
2. Contact the retailer
As we said above, banks and card providers are allowed to cancel recurring payments - and they must when the cardholder withdraws consent for the payment to be taken - or didn't give it in the first place.
Let's just repeat that for emphasis: the card provider must cancel or decline further payments when you withdraw consent for them.
If necessary, cite the Financial Conduct Authority (FCA) Consumer Credit Sourcebook which provides guidance on how firms are supposed to treat customers and explains companies should not:
- Mislead customers by withholding information about the right to cancel and how to go about it
- Fail to respond promptly to requests to cancel or amend the CPA
- Intimidate a customer who wishes to cancel the CPA
- Require customers who wish to cancel to go through a complicated process
Essentially, getting in touch with the retailer should usually be enough to get the CPA cancelled and the FCA expects this process to be straightforward.
There are two good reasons for trying to cancel the payment through the company first:
- You might be able to resolve the issue fairly easily just by getting in touch, or by being politely persistent, which is always preferable.
- Showing that you've made every effort to cancel with the company is highly likely to speed up the cancellation process with the bank if you have to down that route.
This is very similar to the pattern we see again and again with section 75 refunds
.
In law, section 75 makes the credit card provider equally liable with the retailer under certain circumstances. In practice, few card providers will even entertain a claim until the cardholder has reached deadlock with the retailer.
So, as far as CPAs are concerned, contacting the retailer and retaining records of that contact - especially the date you requested that the payment stop - is the pragmatic choice.
3. Go to the card provider or bank
If there is no useful response from the retailer or service provider, the next step is to contact the card provider or bank to stop the payment through them.
Contact them via bank, phone, live chat, letter or in-person in the same way that you would usually get in touch with them.
Name the company receiving the payment and any other information - such as how the payments appear on statements.
Tell the card provider or bank that the payments should be stopped immediately.
If there are any quibbles, cite regulation 55 of the Payment Services Regulations 2009. There's more on this law and its specific clauses below.
4. Last resort
If neither the company nor the card issuer plays ball and you're unable to resolve the issue after eight weeks, you can take the case to the Financial Ombudsman Service.
They are a free, fair resolution service and will be able to give you a final answer.
When assessing whether customers have a valid complaint, the Ombudsman will look at elements such as:
- How the CPA was set up
- What discussions you had with the card provider about the CPA
- The card account's terms and conditions
- What the card provider has already done to put things right
It's important to point out that the Ombudsman is generally looking at the behaviour of the card provider rather the original merchant.
They are checking whether the card provider fulfilled their end of the bargain by cancelling a payment when requested and if they:
- Did so without unnecessary delay
- Refunded any unauthorised payments (unless a merchant has already started the process of taking a payment as a CPA cannot be cancelled mid-process)
If the complaint centres around the fact that a customer doesn't think they consented to the CPA in the first place, the Ombudsman will look at how it was set up and assess whether informed consent was given.
However, it's only if the original merchant is a provider of financial services (like a payday loan company, for example) that the Ombudsman will be able to investigate that part of the complaint. Otherwise, they will try to direct customers to other organisations who can help.
Recurring payments FAQ
Why do companies use recurring payments?
Recurring payments are simple and they are easy to set up for both customers and merchants alike.
Companies don't have to fiddle about with standing orders or direct debit mandates and customers don't have to remember to pay.
There are plenty of legitimate companies who use them, and millions of customers make payments with them each month for things like:
- Streaming subscriptions
- Magazine subscriptions
- Gift box or treat subscriptions
- Gym memberships
- Annual car insurance payments
- Payday loan and high cost short term credit (HCSTC) repayments
These are all legitimate use cases, and it's certainly easier for us to simply enter a card number and quickly gain access to the services and subscriptions we want.
However, the other reason that recurring payments became so popular with companies hawking everything from gym memberships to insurance cover is that they have a reputation for being relatively difficult to stop.
Until the law changed in 2009, the company taking the payment had the final say on whether the payments would carry on.
If they refused to stop a payment, banks and card providers would allow them to continue withdrawing customers' money.
The landscape has changed and it is theoretically much easier for customers to force their card issuer to cancel a CPA, but we still see frustration and complaints from customers who either didn't understand what they were signing up to in the first place or have been unable to cancel a recurring payment.
Should I avoid recurring payments?
People should avoid setting up recurring payments wherever they can, instead asking to make payments via direct debit or standing order.
If a recurring payment is the only option, check all the small print.
Retailers are supposed to ensure that no additional payments are taken can be taken such as extra payments for a payday loan that has been paid off or breakdown cover that is no longer needed.
Make sure there are no pre-ticked boxes tying you into further spending and, if it looks as though the company is trying to lock you in with such tactics, seriously consider walking away from the transaction as it doesn't bode well for trying to cancel it.
Remember that many recurring payments will be for subscriptions and smaller services we use regularly. It can be difficult to avoid them but that doesn't mean that all retailers are trying to hoodwink you by using CPAs - it's just easier in a lot of cases.
How can I tell it's a recurring payment?
Your bank will be able to tell you what type of payment has been taken. It's usually listed on your statement or list of transactions next to the debit too.
As we explained earlier, the dead giveaway that you've signed up for a continuous payment authority is that the company asked for the number on your card.
If they didn't, you may have signed up for regular payments via direct debit or standing order.
Direct Debit
With a direct debit you will have been asked for your account number and bank sort code (the small numbers usually found along the bottom of your card) and to sign or tick a box authorising the direct debit mandate.
You probably also agreed a date for the regular payment to come out of your account.
If it is a direct debit you've got, they're fairly easy to cancel as they're covered by the bank guarantee scheme.
The agreement is with the bank rather than with the company, so the bank knows it must cancel the payment when a customer makes that request.
Get in touch with your bank and give them as much information as possible about the payment: this will include your customer information as well details of the amount and date of the payment.
Standing orders
A standing order is the easiest of all to cancel.
In this case, it's you that asked the bank for the payment to be set up and provided the recipient's bank details.
The example most of us will be most familiar with is paying the rent: your landlord or agent will provide their details and ask you to set up the payment.
You have the right to cancel at any time by request.
Could it be fraud?
If money is leaving your account, but the company named on the transaction denies taking payment or won't get back to you, it could well be fraud.
We've got more information on card fraud in our dedicated guide, but it's worth flagging this straight to the bank and escalating it to the Financial Ombudsman Service if the bank or card provider doesn't act - this is something the Ombudsman takes very seriously.
What if I entered into a contract?
So far, we've been describing a situation like this: you ask for a subscription to be cancelled, the company refuses or says nothing at all.
However, sometimes the retailer will argue that you entered into a contract and suggest that's the reason why the CPA cannot be cancelled.
If a customer genuinely wasn't aware they were signing up for a contract, this is something that card providers should act on because it's classed as an unauthorised transaction.
If you can reasonably show you didn't know it was a contract, it isn't binding.
If you knowingly signed up to a contract but want out, you can still get your bank to cancel the recurring payment - that is, after all, your right.
But you may still owe the company money, and they are entitled to pursue you for it under those circumstances.
What do recurring payments have to do with payday loans?
Since the introduction of the Consumer Contract Regulations in 2014, and a crackdown on payday lenders in general, some of the problems with the industry and the continuous payments authority system have eased up.
For example, lenders are no longer allowed to make repeated attempts to take money from borrowers, or take part-payment unless previously, explicitly, agreed with the borrower beforehand.
But there are still issues. For example, they're allowed to try to take money twice - and if those attempts are declined, both could result in the bank charging the account holder.
They're also supposed to give borrowers notice, usually of three days, before attempting to take a payment - but many of the complaints made to the FOS showed that notice wasn't always given before a repeat attempt.
What do the Payment Services Regulations 2009 say?
If the Consumer Contract Regulations don't apply - that is, the recurring payment was authorised before July 2014, or there's not an issue about unknown additional payments - your fallback is the Payment Services Regulations, which came into force in November 2009 and were transposed into UK law following Brexit as part of the Payment Services Regulations 2017.
The law makes it very clear that card providers and banks have to stop recurring payments if requested to do so by their customers.
They also make it clear that the consumer can do this without having to inform the company who was taking the payments.
The law also specifies that card providers and banks that fail to obey their customers' instructions must refund any payments that occur after the request.
Any fees that may have been incurred must also be refunded.
The actual legislation is available on the Government's website but, be warned, is extremely difficult to decipher for anyone not fluent in legalese.
It's highly unlikely there will be any CPAs still active from before 2009 when the initial Payment Services Regulations came into force.
However, the time the agreement was taken out doesn't matter at this point - it's still a customer's right to cancel and a bank must stop the payments if requested.
Summary: Right to cancel
Some bank and card provider staff will still say they can't cancel a continuous payment authority when we ask them to - but that isn't the case.
The process for cancelling a CPA and escalating a complaint is as follows:
- Try contacting the service provider to cancel the CPA directly
- If that doesn't work, contact your card provider and ask them to cancel
- If the card provider refuses to help, ask them for their complaints process and make a formal complaint
- Escalate the complaint to the Financial Ombudsman Service after eight weeks if you're still not satisfied
There are plenty of legitimate and reputable companies using recurring transactions to charge for the things we enjoy as part of modern life.
However, there are always going to be some instances where companies don't behave properly or bank staff don't know their responsibilities.
Be firm and educate them - you have the right to cancel a CPA.
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