Beware of banks using your expired debit card

Billesleygriffo

Today I learnt a very strong lesson in how a bank (in this case Lloyds) can use your out of date/expired debit card. It relates to my father's car insurance renewal. At 93, he decided a few months ago that his driving career was over, for the safety of him and others. So when the email came through to say his motor policy was due for renewal on 01 March 2019, we ignored the reminders to let the policy lapse (although I did make a telephone call to the insurance call centre back in February to enquire about not renewing). In any case, we thought, the payment would not be able to be taken anyway as the registered debit card on my father's car insurance account had the expiry date of May 2018. All went well when on 07 March an email was received to say the policy had been cancelled, due to what we thought was simply non-payment of the £845.00 premium. However, upon visiting my father today (28 May) we started discussing his car and he told me that on his March bank statement the policy WAS paid. I immediately telephoned the insurance company to ask how this could have happened with only an expired debit card on my father's policy. They said that they had requested the payment from Lloyds bank, and the bank, although fully knowing it had been requested against an expired debit card, used their "discretion" to act on my father's behalf and pay the policy as it was seen by them as a "continuous" transaction - i.e. he'd paid for the 2018 insurance premium on the same debit card, and they assumed he would wish to do so again. The other annoying thing is, on 07 March, the insurance company sent another email saying they were unable to make a refund to the same debit card that the bank had paid them the £845, as it was expired. So a bank can pay on a expired card, but then the refund cannot be put back onto it. I was upset that the transaction had gone through, and can't really blame my elderly parent for not bringing this to my attention before today. I was further advised by the insurance company that I would have to contact Lloyds bank to tell them to stop any further "continuous" payments on future expired cards.

So the warning is, don't assume that payments cannot be taken from an out of date debit (or credit) card if you have it registered with an annual insurance policy, and think you can just "not pay" to lapse the policy. :mad::mad::mad:

Zanderman

A Continuous Payment Authority (CPA) is a common way to pay for insurance etc. And indeed many other things, particularly subscriptions.

CPAs don't show up on online banking like Direct Debits, so people may forget or be unaware they have them, particularly for annual payments. For annual payments you would normally get a reminder the payment will soon be made unless you take action.

And they do not expire when the debit card does, they carry on. This is normal, not unusual. Otherwise people would find their subscriptions etc would cease every three years when their cards get replaced.

It sounds as if this is what your father had. In which case you should NOT have ignored the reminders - indeed they should have explicitly stated that if no instruction to cancel was issued the payment would be taken. again, this is normal.

Moral (and Warning if you prefer) is, actually, read the reminders rather than ignoring them.

Ben8282

And stop blaming the wrong people. The bank are NOT at fault. If anybody is at fault, it is the insurance company although I would suspect that they said somewhere that the policy would be automatically renewed unless cancelled. Also, unless you have a LPA for your father registered with the insurance company, they should not be speaking to you and certainly not taking instruction from you.
And what has happened to the car? I hope it is not parked or being used on the public highway uninsured.

eDicky

An insurance policy with automatic annual renewal by CPA will not 'lapse' by ignoring the reminders, as you have discovered.

There is no fault of the bank, they simply did what was required according to the way the CPA was set up, until cancelled.

agrinnall

With some people it's always somebody else's fault, isn't it? Even when it clearly isn't.

Billesleygriffo

I do have an LPA in place my parents, and my father's car has a SORN on it

Ergates

Billesleygriffo wrote: »

So when the email came through to say his motor policy was due for renewal on 01 March 2019, we ignored the reminders to let the policy lapse

Oops. I assume you realise what you did wrong there now?

Consider these 2 scenarios.
1) Payments under CPAs continue even when the card they were initiated under expires - meaning people have to phone up their insurance provider and cancel the policy rather than just ignoring the emails/letters.

2) People who forget their car insurance was paid with a now expired card find themselves in trouble with the police for driving without insurance and facing some hefty fines.

Which do you think would cause the most harm to the most people.

Billesleygriffo

I'm not in the "blame game". I just wasn't aware of CPA. Now that I am, I understand the implications and process. You can teach an old dog new tricks!! People can't know everything about everything. That's the beauty of forums like this. We learn from each other.

Uxb1

One advantage of this arrangement of CPA you might not yet have thought about is that it means that people with busy lives and umpteen other things to do and problem to sort out are unlikely to accidentally not renew their car insurance by not updating their credit card/expiry date etc.
If they do forget about it - its renewed and charged for automatically.

As a result it is less likely that there are people driving around accidentally uninsured due to the owners omission or forgetfulness - which is excellent news for everyone when they have a crash!
You really do not want to have a crash with an uninsured driver.

YorkshireBoy

Ben8282 wrote: »

Also, unless you have a LPA for your father registered with the insurance company, they should not be speaking to you and certainly not taking instruction from you.

When my elderly father starts a car insurance policy by telephone, all of the providers we've used in recent years ask the same question..."is there anyone you wish us to deal with on your behalf regarding the policy?" Most recent was Churchill last autumn.

No LPA required for us.

Takmon

YorkshireBoy wrote: »

When my elderly father starts a car insurance policy by telephone, all of the providers we've used in recent years ask the same question..."is there anyone you wish us to deal with on your behalf regarding the policy?" Most recent was Churchill last autumn.

No LPA required for us.

That seems an odd question to be asking, they seem to thinking that he is pretty old so must have have someone dealing with insurance on his behalf yet they are happy he is ok to drive a car.

Also you really should get a LPA in place (if you havn't already) before it is too late.