Banks to cancel recurring payment arrangements upon customers' request

The regulator said that banks should not force consumers to contact merchants directly in order to cancel recurring payments, although this will remain a possible route of action for consumers to pursue.

The banks have also agreed to provide customers with an immediate refund if a cancelled recurring payment, or 'continuous payment authority', is accidentally processed, it said.

The FCA said that it wanted to make it easier for consumers to cancel recurring payments after noting a number of cases in which individuals had found it difficult to cancel recurring payment arrangements set up with payday lenders. Customers will continue to be able to cancel recurring payments directly with merchants and will still be responsible for ensuring any money owed to those companies is paid, it said.

Clive Adamson, the FCA’s director of supervision, said that the new approach would give consumers greater "control over their finances and expenses".

"Recently we secured an agreement for banks to use a same day re-try process [when processing direct debits, standing orders and future dated bill payments], and this is another example of improvements we are making to customers’ experience of their everyday banking," Adamson said.

"It’s important that consumers are confident that banks are meeting their everyday banking needs. Today customers can be confident that when they ask for a Continuous Payment Authority to be cancelled – it will be cancelled – and that it can be done easily. We recognise that historically this is an area where some customers have struggled but the banks and mutuals have responded positively to our work on this issue. From now on we expect them to be getting this right," he added.

The FCA said that the banks have agreed to undertake a review of every complaint received about the non-cancellation of recurring payments received since November 2009. The banks will "pay redress" to customers where it is found that they processed recurring payments customers had arranged to cancel, it said.

Testing undertaken by the FCA earlier this year found that around 70% of recurring payment cancellation notices resulted in a "successful stop" to payments.