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When everyone has a home

028 9024 5640: Housing & Debt Helpline for Northern Ireland

Adviser: Putting a stop to continuous payments

I recently met Teresa, a lone parent and Housing Executive tenant in rent arrears.  Teresa was at risk of possession and really needed help. 

Teresa was having difficulties paying her rent because she was under a lot of financial pressure and she had debts including a couple of payday loans which she’d taken out to tide her over at a time when she was finding things particularly tough.

I talked to Teresa about the importance of paying her rent and how the other payments would have to take a back seat.  Teresa told me that she’d tried to stop the payments to the payday loan company but her bank had insisted that they couldn’t do this unless the request came from the loan company.

Teresa had entered into a Continuous Payment Authority (CPA) with the payday lender. I contacted her bank directly to request the immediate cancellation of the CPA.  The Bank responded to me exactly as it had to Teresa until I pointed them to the Financial Conduct Authority’s guidance in relation to this type of payment.

What is a Continuous Payment Authority?

A CPA is linked to a credit or debit card and is different from a standing order or a direct debit.   Some companies that use CPAs will change the dates and the amounts they take out of your account.  They may also make repeated attempts to take payments and if you don’t have the funds in your account when they try you could end up being charged by your bank.

Financial Conduct Authority Guidance on continuous payments

The Financial conduct Authority guidance in relation to continuous payments states:

These regular card payments are often confused with direct debits, but do not offer the same guarantee if the amount or date of the payment changes (as above). In most cases, you can cancel these types of regular card payments by telling (or writing to) the company taking the payments.

However, you have the right to cancel these regular card payments directly with your bank or card provider by telling it that you want to stop permission for the payments. Your bank or card provider must then stop the payments – it cannot insist that you firstly agree this with the company taking the payments.

You should be aware that you will still be responsible for paying any money that you owe to the company that was taking the regular card payments.

Tips for advisers

Remind your clients of the difference between a CPA and other types of recurring payments.  Clients should always ask what type of payment is being set up.  Direct debits or standing orders may be better payment systems for many clients.

Once we stopped the payday loan repayments Teresa and I had a look through her finances.  I was able to sort out a payment plan with Teresa that will allow her to manage her rent and rates arrears.  I’m in the process of writing to her other creditors to see what help they can offer Teresa at this time.

If you’re regularly dealing with clients who face homelessness because of money problems you might want to check out our Preventing Homelessness course.

Our Made of Money course in December is already sold out.  This course is great for any organisations that provide money awareness sessions to tenants or clients. If you would be interested in having this course delivered at your premises for the advisers in your organisation please contact geraldine@housingrights.org.uk

Money Week is a week-long programme of events, designed to help people develop their skills and confidence to manage their money and will take place from 9 – 15 November 2013 with events planned throughout the Newry and Mourne area. For the full schedule of Money Weeks event view the brochure by clicking here.

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Social Tenancies, Practical tips, Affordability, Adviser

This article was written on 8 November 2013. It should not be relied on as a statement of the current law or policy position. For help with housing issues please contact our helpline on 028 9024 5640 or use our online chat service at www.housingadviceNI.org.