02 May 2012

Consumer Focus Research Shows CPA Confusion

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.

Sarah Brooks, Director of Financial Services at Consumer Focus said: "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.

"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."

(CD/GK)