Payday loans which are abundantly available online have become the source of most consumers’ monetary problems prevailing. Payday loans online are instant solutions for emergency financial problems. According to a recent study by BBC, some banks have refused to cancel payments to payday loan firms, in spite of the fact that they are legally obligated to do so. Most often customers are asked concentrate on paying priority debts and they have been suggested to do so by debt charities. According to The Financial Services Authority, a customer is fully authorized to cancel any payment leaving their account. However, some banks say that it won’t be possible to cancel every type of payment.
Mr. Lee from Norfolk had borrowed an amount of £250 from a payday lender which he agreed to pay back within the usual time period of one month. However, within a short span of time after this, he encountered major financial crisis and he contacted the charity National Debt line for help. He was suggested to postpone the payment of the payday lender and concentrate on debts which have the top priority such as council tax. Hence Mr. Lee tried to do what he was advised. He was asked to contact Barclays and cancel the continuous payment. However, Barclays told him that if the company is financial one then they cannot cancel the payment. The payday lender took an amount of £150 from Lee’s account leaving him no scope to pay anything off his council tax arrears. He had already dispatched a letter stating that he would not be able to afford the repayment as he had to concentrate on the debts which were at the top of his priority list. Lee was quite dissatisfied with Barclays for not being able to solve the problems that he and customers like him were facing.
Mr. Martin from Dorset had borrowed an amount similar to Lee’s which he wasn’t being able to repay. He had asked his bank NatWest to get his payday loan payments cancelled while he was reorganizing his finances. However, like Barclays, NatWest informed Mr. Martin that his payday payment cannot be cancelled. The right to ask your bank to cancel the continuous payments has been established by law in 2009 by Payment Services Directive. In fact, if a customer withdraws his permission for money to be taken out from his account for any further payment, then all such payments have to be reimbursed by the bank.
The banks are however making a different interpretation of this. HSBC had said that there were some circumstances in which they might not be able to give permission for cancelling payments. Barclays claimed that their customers can normally cancel, however, in the case of Lee they had been unable to meet their usual standards and would ensure that the amount is refunded and reversal of any charges levied is taken care of. On the other hand NatWest/RBS said that they might be able to cancel some payments of payday lenders but not the ones which are single payment or installment payment.