Jade took out a payday loan with a lender. As part of the agreement, the lender set up her loan repayments using a continuous payment authority on her debit card.

What happened

A week before her first repayment was due, Jade realised she wouldn't have enough money in the account. So she asked her bank to stop the CPA. The bank cancelled her card to try to help, but this didn’t stop the CPA and the lender took the first repayment.

This meant Jade went overdrawn, incurred charges on her account and had to defer the next rent payment on her flat. But the bank said there was nothing more they could do, and that she owed the money to the lender anyway.

Our decision

In this case, we felt the bank had acted incorrectly. It should have cancelled the CPA regardless of what was agreed between Jade and the lender. So we told the bank to cancel the CPA, and waive the interest and charges it had applied to Jade’s overdrawn account.

We also told the bank to pay Jade compensation. In deciding the amount, we took into account the distress and inconvenience Jade had experienced in trying to sort things out with her landlord – but also the inconvenience she’d been saved by paying the lender the money she owed.