Clare gave her debit card details to the lender so they could take the repayment from her account at the end of the month.

But as the repayment date approached, Clare realised that she had less money than she’d thought. She asked her bank to stop the repayment from leaving her account.

Complaint upheld

Clare was short of money, so she decided to take out a payday loan. The application process went smoothly. Clare gave her debit card details to the lender so they could take the repayment from her account at the end of the month.

But as the repayment date approached, Clare realised that she had less money than she’d thought. She asked her bank to stop the repayment from leaving her account, but they said they couldn’t help. They explained that because this was a single payment - rather than a recurring one - only the loan company could do something about it.

Because Clare still needed money, she took out another loan out with the same company - and the same thing happened again the following month.

Unfortunately, Clare couldn’t find her way out of the situation. She took out a number of loans - and each time asked her bank to stop the repayment from leaving her account. Each time the bank said that they couldn’t help.

Clare complained to the bank, saying that they ought to be able to stop the repayments going out. But the bank said they couldn’t do anything about it.

Clare was getting increasingly desperate, and she decided to come to us for help.

What we said

We needed to decide whether the repayments to the lender had been authorised.

When Clare had given her card details to the lender to allow them to take the repayments from her account, she had authorised the repayments. But when she later asked the bank to stop the repayments, we decided that they became unauthorised.

The bank argued that when Clare had taken out subsequent loans, she was authorising the repayments again. But we couldn’t see any evidence to show that this had happened. We could see that Clare had given a standing authority for future repayments when she took out the first loan - and the subsequent repayments would have been made under this authority. But when Clare asked the bank to stop the repayments, the standing authority should have ended.

In cases where we decide that a bank has made unauthorised payments, we usually tell them to refund the money to their customer. In this case, however, the money wasn’t Clare’s - because the money belonged to the lender. If the payments had been stopped, then Clare would still have owed the lender money. So Clare wasn’t out of pocket because of the bank’s actions.

But we could see that the bank’s refusal to stop the payments had caused Clare a lot of distress - when she really needed support. So we told them to pay Clare £350 compensation.