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9 in 10 could complain about payday lenders accessing bank accounts

11 Medi 2013

Citizens Advice calls for ‘health warnings’ in payday loan marketing

Hard-up consumers are being exploited by payday lenders who drain their bank accounts using continuous payment authorities (CPAs). Citizens Advice has seen evidence of money being taken without permission or warning and sometimes even after loans have been paid off.

New figures reveal that one in three complaints about payday loans made to the Citizens Advice consumer service were because of CPAs. Nine in ten payday loan customers who complain about the controversial payment method could have grounds for a complaint about unfair treatment.

An in depth analysis of 665 payday loan customers who contacted the charity’s consumer service between January and June 2013 found that 32% (201 people) had complaints about CPAs. Of these:

  • 9 in 10 could have grounds for a complaint to the Financial Ombudsman Service.
  • 1 in 5 were already in financial difficulty or on a debt management plan.
  • 1 in 6 had money taken without their authorisation.
  • 1 in 6 said that the payday lender used a CPA to take more money than they had originally agreed.

Citizens Advice also heard from people who had money taken before the due date, after their loan was paid off or had more money than they had expected taken.

CPAs are often used by payday loan firms to collect repayments directly from someone’s bank account. They should not be used to take money or change repayment amounts without warning but a creditor has flexibility over when and how much money they take from someone’s account, so can be used to remove any amount at any time.

In some cases, bank accounts are completely drained, leaving people with no option but to borrow more to cover basic costs like food or rent, and face high overdraft fees and late payment charges if there isn’t enough money to cover all  payments.

Citizens Advice Chief Executive Gillian Guy said:

“People can feel powerless when unscrupulous payday lenders use CPAs to run amok in their bank accounts. Now, we’re reminding consumers that they can fight back.

“Misuse of CPAs can leave people without money to eat, pay rent or get to work, and can force people further into debt to stay afloat. If you’ve been badly treated, and the lender hasn’t put right their mistake, then you can complain to the Financial Services Ombudsman.

"If you need to stop money from leaving your account, you can end the agreement simply by contacting your bank. Banks must cancel CPAs when you ask them to.

“Sadly, CPAs are just one of the many problems Citizens Advice sees with payday lenders. We help people who have been victims of fraud, given loans despite having no income and hounded by lenders at home and at work.”

Consumers have the right to cancel CPAs before payment is taken, but many who try are passed between banks and payday lenders who both claim that they can do nothing to stop the money from coming out.

Citizens Advice is calling on banks to respect their customers’ right to cancel CPAs, and welcomes the Financial Conduct Authority’s recent ruling that banks must end agreements themselves when the customer requests it.

The new figures come as the consumer champion calls for tighter controls on payday loan advertising, and encourages the public to fight back and report irresponsible adverts.

Citizens Advice wants ‘health warnings’ on payday loan websites, meaning that a warning page would appear when people access the loans online, so that consumers are fully aware of the risks before they decide whether to go ahead.

The national charity also wants to see a sector-specific code for payday loans ads, like there is for gambling. This should include a ban payday loan ads before 9pm, and ensure that lenders tell customers what will happen if they struggle to repay the loan.

Payday loan customers can provide feedback on their experience of continuous payment authorities through the Citizens Advice payday loan tracker

Real life case study stories

A CAB in the West Midlands helped a man with mental health problems whose entire wages were taken in three separate instalments on the day he was paid. This left him with no money for essentials and pushed him over £200 into an unauthorised overdraft.

A young woman in Wales came to CAB for help when payday lenders took so much out her account that she was unable to cover her living expenses, despite her trying to cancel the agreements with her bank. The lenders rolled over her loans, meaning that her debts grew so large she was unable to keep up with rent and was eventually forced to move out of her home.

Following advice from CAB, a man in the North East cancelled his CPAs and negotiated repayment plans with his payday lenders. However, one lender still took the full amount owed, leaving him in dire financial straits.


Notes to editors

Advice tips if you are in financial difficulty and considering a payday loan:

•Get help with your money troubles. Your local Citizens Advice can provide debt advice and help you sort out your finances. By making a few changes you may be able to avoid taking out a short-term loan.

•It is important to consider all the other options available to you before taking out a payday loan as they are expensive and could make your money problems worse.

•Pay day loans can be a costly way to deal with short term financial problems and are not suitable for long term money troubles. •A loan from a credit union is more affordable – check if there's a credit union in your area.

•If you have a bank account, you may be able to agree an overdraft. But be careful of going overdrawn without permission and make sure you understand any fees and charges.

•If you are thinking about taking out a payday loan to pay off other debts, don't. Instead, speak to the companies you owe money to and agree a repayment plan. You can get help with debts from or your local Citizens Advice Bureau.

  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. As part of the #paydaywatch campaign, Citizens Advice has launched a new film to make sure that consumers know that payday lenders can’t take money from your bank account without warning, can’t contact you at all hours of the day and night and should never pressure you to take out further loans. You can watch the film here.
  3. Of these, 210 people had problems with Continuous Payment Authorities.
  4. Citizens Advice analysed customer feedback on 2,718 payday loans from 126 different payday lenders. Feedback was provided between 26 November and 21 July 2013 through an online survey, questionnaires in bureaux and face to face surveys on high streets. The study was promoted widely through national media and other organisations including Nationwide, Which?, Toynbee Hall and other debt charities. The tracker monitors whether lenders are abiding by their own customer charter.
  5. 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.
  6. 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.
  7. To find your local bureau in England and Wales, visit You can also get advice online at
  8. 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
  9. 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
  10. Citizens Advice service staff are supported by more than 22,000 trained volunteers, working at over 3,000 service outlets across England and Wales.