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What Is Continuous Payment Authority?

What Is Continuous Payment Authority?

What Is Continuous Payment Authority?

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Making your loan repayments on time is essential if you do not want to damage your credit rating. Continuous Payment Authority (CPA), sometimes referred to as continuous card payment, is one way to ensure you repay your loan when it is due

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What is continuous payment authority (CPA)?

CPA is where you give a company permission to take money from your debit card on a regular basis. For this reason, it is sometimes called ‘recurring payments.

CPA is not just restricted to the financial services industry. As well as loan providers, CPA is used by many other businesses. For example, you may already pay for a magazine subscription or a gym membership in this way.

Although often confused, CPA is different to a direct debit. This is because with CPA, the payment instruction goes to the company, not to the bank as it would with direct debits.

This gives lenders the flexibility to be able to take money from your account when they want and for the amount they want. However, you do have the right to cancel CPA.

How does CPA work?

You can set up CPA either in person or remotely (online or over the phone).

Rather than providing your bank details, you will be asked for your credit or debit card information. The company will then be able to take money from your credit or debit card.

What are the risks of paying by continuous payment authority?

Unlike direct debits or standing orders, any company you have given CPA to can effectively take cash from your card, whenever they think that you owe it.

CPAs can also be difficult to see coming out of your account, as they look like any other payment. They do not have ‘CPA’ written next to them.

Up until 2009, it was only the company that had the right to cancel the CPA. Now, consumers have a right to ask their bank to cancel any CPAs. According to a Financial Conduct Authority (FCA) investigation in 2013, there have been problems with banks failing to cancel recurring payments when asked to do so and referring customers to the company, instead.

The biggest risks with CPA are not likely to come from legitimate loan providers but through smaller companies based abroad.

How do you stop continuous payment authority?

While it is the bank which has an obligation to cancel CPA when you ask it to, it may be easier to go to the lender, first. Explain to them that you do not want continuous card payments any longer and they will normally accept this. Even if the provider agrees to ending your CPA, you should also contact your bank to ensure no money is taken from your account.

Banks need at least one working days’ notice before a payment is due, in order to cancel a specific payment.

Remember, because you are cancelling the CPA, you will still have to make any outstanding payments another way.

Reclaiming CPAs that your bank did not cancel

If you asked your bank or credit card company to cancel a CPA but they did not do so, you are able to claim back the money that was taken.

You can claim a refund for any CPAs from November 2009 that were not cancelled by your bank or card provider, when you asked them to do so.

Get in touch with your bank to make a claim. If you have already made a complaint about a CPA that was not cancelled when you asked for it to be, after November 2009, your bank should contact you anyway. However, you should get in touch to make sure the process has started.

As well as the money that was taken after you attempted to cancel the CPA, you should also receive any interest you had to pay on the cash that was removed from your account.

Continuous payment authority vs. Direct debit

Continuous card payments can be difficult to stop. You have to ask the service provider or your bank to cancel CPA for you.

Direct debit gives you more control over the money leaving your account. You can cancel a direct debit using internet banking.

Summary: CPA

Recurring payments, while harder to cancel, do have their positives. Signing up to CPA means your loan repayments will be taken from your debit card automatically. This way, you should have less chance of damaging your credit rating by forgetting to pay.

Some loan providers will insist that you use CPA to make your repayments when you take out a loan. However, you do have the right to cancel continuous card payments, should you decide you would prefer to repay your loan another way.