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Lord Freud promises action to tackle misuse of CPAs

1 Hydref 2013

The Government is right to look at what they can do to prevent payday lender’s misuse of Continuous Payment Authorities (CPAs), after Citizens Advice revealed that one in three complaints they received were due to the way lenders used CPAs.

Today, Lord Freud told a fringe meeting at the Conservative party's annual conference that he has asked civil servants to look into ways of restricting lenders' access to accounts of benefit claimants. Citizens Advice has called for stronger controls to make sure that protections cover everyone.

Gillian Guy, Chief Executive of National Charity Citizens Advice, said:

“The Government is absolutely right to look at how they can stop payday lenders misusing Continuous Payment Authorities (CPAs). Our evidence has shown that up to a third of problems with payday loans could be due to the way CPAs are used, with some people reporting that their bank accounts have been drained completely before they can pay essential living costs.

“Making sure that people who claim benefits are protected until their rent and utility bills are paid is a step forward. But it will do nothing to protect borrowers who are in work or make sure that people have enough money to put food on the table or travel for work.

“Payday lenders must understand that a CPA agreement does not give them a carte blanche to run riot in borrower’s banks accounts. They need to do more to help those who are struggling, not take money from them in a way which leaves them with little or nothing to get by. Customers have the right to cancel these agreements with their bank, which must be respected.

“In the meantime, we’re reminding people that they can fight back. Our analysis showed that nine in 10 of those who had complaints about CPAs and payday lenders could go to the Financial Services Ombudsman, who can force lenders to put things right.”

Last month, Citizens Advice revealed problems with the way lenders were using CPAs including:

  • money being taken without authorisation
  • amounts being altered without their permission
  • money being taken before the due date or after a loan was paid off
  • payday lender using a CPA to take more money than they had originally agreed

Notes to editors

  1. Citizens Advice carried out an in depth analysis of 665 payday loan cases reported to its consumer service between 1 January and 30 June 2013 by consumers from England, Scotland and Wales.
  2. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  3. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  4. To find your local bureau in England and Wales, visit www.citizensadvice.org.uk. You can also get advice online at www.adviceguide.org.uk
  5. You can get consumer advice from the Citizens Advice consumer service on 08454 04 05 06 or 08454 04 05 05 for Welsh language speakers
  6. Citizens Advice Bureaux in England and Wales advised 2.1 million clients on 6.6 million problems from April 2012 to March 2013. For full 2012/2013 service statistics see our quarterly publication Advice trends
  7. Citizens Advice service staff are supported by more than 22,000 trained volunteers, working at over 3,000 service outlets across England and Wales.