Jade approached us after her bank cancelled her debit card when she asked it to stop a payment, leading to financial stress and difficulties.
What happened
Jade took out a payday loan with a lender. The lender set up her loan repayments with a continuous payment authority (CPA) on her debit card. This is a type of recurring payment that lenders can set up on a customer’s card account with permission to take payments when they’re due.
A week before the first repayment was due, Jade realised she wouldn't have enough money in her bank account to cover it. She asked her bank to cancel the CPA so the payment wouldn’t go through, but there was some confusion. The bank cancelled her card, but this didn’t stop the CPA. So the lender still took the first repayment.
Because the money left Jade’s account, it went overdrawn. She didn’t have an arranged overdraft, so the bank charged her overdraft fees. Jade also had to negotiate with her landlord and defer the next rent payment on her flat.
When she complained to the bank, it said there was nothing else it could do and that she owed the money to the loan company anyway.
What we said
We looked at what happened in this case. The bank had cancelled Jade’s debit card, but not the CPA.
Regulations make it clear that when a customer requests to cancel a CPA, the bank is required to do so – regardless of the arrangements between the customer and a lender. So, we upheld Jade’s complaint and 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 for distress and inconvenience. To decide how much, we considered the trouble Jade had had trying to sort things out with her landlord. We balanced this with the inconvenience she’d avoided because she no longer had to pay the lender the money she owed.