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They are easy to set up but can be very difficult to cancel – and payday loan companies love them.

Continuous payment authorities are like direct debits, but with fewer rights.

They are easy to set up over the phone on a debit or credit card and allow firms to vary amounts and take money on dates of their choosing.

And all too often customers’ requests to cancel them are ignored.

Now, banks have agreed that a request to end a recurring payment will be sufficient to cancel, rather than the customer having to contact the merchant. Incorrect payments following cancellation will also be immediately refunded.

Banks are to review all complaints since November 2009 and award compensation to consumers whose payments continued despite them asking the bank to cancel.

Clive Adamson, the FCA’s director of supervision, said the regulatory body had been working hard to improve everyday banking for the consumer.

“It’s important that consumers are confident that banks are meeting their everyday banking need. Today customers can be confident that when they ask for a Continuous Payment Authority to be cancelled – it will be cancelled – and that it can be done easily.”