What is Continuous Payment Authority that my payday lender uses?

Summary: This article explains what Continuous Payment Authority is, how it works and how to cancel it if required.

Continuous Payment Authority (CPA) is a method of payment whereby an individual provides credit or debit card details for regular monthly payments to be taken for their account. It is popular with many business such as gyms and more recently, payday loan lenders.

How does CPA differ from a direct debit or a standing order?

The rules surrounding CPA can often be confusing, and it is important to be aware that they differ greatly for other forms of regular payments. A standing order is a fixed amount paid from an individual's account on a specific day. The only way changes can be made is by the individual themselves. A direct debit allows the recipient to amend the monthly amounts paid providing notification is given, but there is a guarantee associated with a direct debit, making it easy to cancel and recoup any payments that may have been incorrectly taken. CPA, on the other hand, allows a company to change the amount collected and the collection date without prior notice to the individual, and there are no guarantees associated with a CPA as there are with a direct debit. This could cause problems as a company could potentially take money from an account without any notice.

Are there any rules a company must adhere to when collecting via CPA?

The Office of Fair Trading (OFT) have laid out Principles of Use of Continuous Payment Authority, which can be found on their website, but many individuals are unaware of the implications of CPA. That said, Pay day loan lenders who follow the Code of Good Practice do have a responsibility to advise their potential customers if they use this payment method and how it works.

How can I cancel CPA?

For those familiar with Internet banking, they will be aware how easy it is to cancel a standing order or a direct debit simply by pressing a button and they are listed as a regular payment. CPA, however, does not have such an option. In fact, the only way of seeing it is to trawl through all the transactions made on a bank statement. However, it should be very simple to cancel by contacting the company directly, or by speaking to the bank. While the bank has to stop payments if requested, it is important to also advise the company as there could be contractual obligations, or in the case of a payday loan, outstanding debt that still needs to be repaid.