Continuous Payment Authority and How It Works

Continuous payment authority or CPA is a collection method used by guarantor lenders to collect recurring repayments from a customer’s bank account.

So when a customer’s repayment is due each month, the funds will automatically be collected from their debit account so they don’t have to worry about making a manual payment or calling up to repay.

This is useful for the lenders we feature on our comparison table that may have hundreds of payments to collect at a time, especially on the last Friday of the month when most people get paid from work.

The continuous payment authority allows lenders to schedule several payments on a certain date and they will be alerted if a payment has not gone through – which could be due to insufficient funds or because the customer’s debit card has expired.

How is continuous payment authority different to a direct debit? 

The main difference between continuous payment authority and direct debit or standing orders is that CPA is set up and controlled by the lender. During the application and underwriting process for a guarantor loan, the customer will provide their debit card details and the lender will verify their card using continuous payment authority. When collections are due, the lender will access the account to collect the outstanding amount from the customer.

By comparison, a direct debit or standing order is set up by an individual at their local bank, over the phone or through their online banking. When setting it up, they can specify who they are sending the money to, what dates and how much, without the other party needing to confirm or verify this. Hence, a direct debit can be changed or cancelled at any time.

How often can lenders use it to collect funds? 

If a lender is unable to obtain the repayment due from a customer, they can use CPA to access the account again. This is commonly used because some people do not get paid first thing in the morning and so the lender might try to collect from them in the afternoon.

Historically, lenders could use CPA as many times a day as they wanted, although there would always be a fee every time they used it. However, due to increased FCA regulation and the need to protect customers, the number of times continuous payment authority can be used has been limited to two per day. (Source: Citizen’s Advice Bureau)

Can I cancel my continuous payment authority? 

Yes, as your right as a customer, you can ask the lender to cancel your recurring payments at any time and they have the legal obligation to do so. You can also go to your bank or card issuer directly and ask them to cancel the payments going to the lender.

You might wish to cancel if you have some other urgent expenses and instead of making the repayment, you need the money to go towards something else. Similarly, if you are falling into a debt spiral, you may wish to cancel some payments to avoid getting into more financial difficulty.

If a payment goes through and you previously tried to cancel the payment with the lender, you should be able to claim it back and get a refund.

What about paying by credit card? 

The guarantor loan lenders we feature do not accept credit cards as a form of repayment because it is like using one form of credit to pay another and can lead to financial difficulties.

In some cases, lenders will accept cheques or cash as a form of repayment, however, you must notify the lender if you are going to do this because any late repayments can incur extra fees.

As a customer, you will also be able to make payments yourself at any time by simply calling up the lender and asking to make repayment. Every company we work with also has a ‘my account’ section on their website where you can always login and repay. Most guarantor lenders allow for early repayment so if you wish to clear your account you can do so. Plus, your loan will be open for less time and since lenders charge a daily interest rate, you will save a lot of money as a result.