diff --git a/compiler/src/dotty/tools/dotc/cc/Setup.scala b/compiler/src/dotty/tools/dotc/cc/Setup.scala
index 07ff3b841283..21c58385b58a 100644
--- a/compiler/src/dotty/tools/dotc/cc/Setup.scala
+++ b/compiler/src/dotty/tools/dotc/cc/Setup.scala
@@ -95,12 +95,13 @@ class Setup extends PreRecheck, SymTransformer, SetupAPI:
       def apply(x: Boolean, tp: Type): Boolean =
         if x then true
         else if tp.derivesFromCapability && variance >= 0 then true
-        else tp match
+        else tp.dealiasKeepAnnots match
           case AnnotatedType(_, ann) if ann.symbol.isRetains && variance >= 0 => true
           case t: TypeRef if t.symbol.isAbstractOrParamType && !seen.contains(t.symbol) =>
             seen += t.symbol
             apply(x, t.info.bounds.hi)
-          case _ => foldOver(x, tp)
+          case tp1 =>
+            foldOver(x, tp1)
       def apply(tp: Type): Boolean = apply(false, tp)
 
     if symd.symbol.isRefiningParamAccessor
@@ -270,6 +271,8 @@ class Setup extends PreRecheck, SymTransformer, SetupAPI:
     def mapInferred(refine: Boolean): TypeMap = new TypeMap with SetupTypeMap:
       override def toString = "map inferred"
 
+      var refiningNames: Set[Name] = Set()
+
       /** Refine a possibly applied class type C where the class has tracked parameters
        *  x_1: T_1, ..., x_n: T_n to C { val x_1: T_1^{CV_1}, ..., val x_n: T_n^{CV_n} }
        *  where CV_1, ..., CV_n are fresh capture set variables.
@@ -282,7 +285,7 @@ class Setup extends PreRecheck, SymTransformer, SetupAPI:
               cls.paramGetters.foldLeft(tp) { (core, getter) =>
                 if atPhase(thisPhase.next)(getter.hasTrackedParts)
                     && getter.isRefiningParamAccessor
-                    && !getter.is(Tracked)
+                    && !refiningNames.contains(getter.name) // Don't add a refinement if we have already an explicit one for the same name
                 then
                   val getterType =
                     mapInferred(refine = false)(tp.memberInfo(getter)).strippedDealias
@@ -306,6 +309,11 @@ class Setup extends PreRecheck, SymTransformer, SetupAPI:
               tp.derivedLambdaType(
                 paramInfos = tp.paramInfos.mapConserve(_.dropAllRetains.bounds),
                 resType = this(tp.resType))
+          case tp @ RefinedType(parent, rname, rinfo) =>
+            val saved = refiningNames
+            refiningNames += rname
+            val parent1 = try this(parent) finally refiningNames = saved
+            tp.derivedRefinedType(parent1, rname, this(rinfo))
           case _ =>
             mapFollowingAliases(tp)
         addVar(
diff --git a/tests/neg-custom-args/captures/leaky.check b/tests/neg-custom-args/captures/leaky.check
new file mode 100644
index 000000000000..b5ced771e0f6
--- /dev/null
+++ b/tests/neg-custom-args/captures/leaky.check
@@ -0,0 +1,32 @@
+-- [E007] Type Mismatch Error: tests/neg-custom-args/captures/leaky.scala:14:2 -----------------------------------------
+14 |  val f: Any ->{a} Any = _ =>  // error
+   |  ^
+   |  Found:    test.runnable.Transform{val fun: Any ->{a} Any}^{a}
+   |  Required: test.runnable.Transform
+15 |    a.print()
+16 |    ()
+17 |  Transform(f)
+   |
+   | longer explanation available when compiling with `-explain`
+-- [E007] Type Mismatch Error: tests/neg-custom-args/captures/leaky.scala:20:2 -----------------------------------------
+20 |  val f: Any ->{a} Any = _ => // error
+   |  ^
+   |  Found:    test.runnable.Transform{val fun: Any ->{a} Any}^{a}
+   |  Required: test.runnable.Transform
+21 |    a.print()
+22 |    ()
+23 |  val x = Transform(f)
+24 |  x
+   |
+   | longer explanation available when compiling with `-explain`
+-- [E007] Type Mismatch Error: tests/neg-custom-args/captures/leaky.scala:27:2 -----------------------------------------
+27 |  val f: Any ->{a} Any = _ =>  // error
+   |  ^
+   |  Found:    test.runnable.Transform{val fun: Any ->{a} Any}^{a}
+   |  Required: test.runnable.Transform
+28 |    a.print()
+29 |    ()
+30 |  val x = Transform.app(f)
+31 |  x
+   |
+   | longer explanation available when compiling with `-explain`
diff --git a/tests/neg-custom-args/captures/leaky.scala b/tests/neg-custom-args/captures/leaky.scala
new file mode 100644
index 000000000000..b401cab0df63
--- /dev/null
+++ b/tests/neg-custom-args/captures/leaky.scala
@@ -0,0 +1,37 @@
+package test.runnable
+import language.experimental.captureChecking
+
+case class A() extends caps.Capability:
+  def print() = println("leaking...")
+
+class Transform(fun: Any => Any):
+  def run() = fun(())
+object Transform:
+  def app(f: Any => Any): Transform { val fun: Any->{f} Any } ^ {f} =
+    Transform(f)
+
+def leak(a: A): Transform^{} =
+  val f: Any ->{a} Any = _ =>  // error
+    a.print()
+    ()
+  Transform(f)
+
+def leak1(a: A): Transform^{} =
+  val f: Any ->{a} Any = _ => // error
+    a.print()
+    ()
+  val x = Transform(f)
+  x
+
+def leak2(a: A): Transform^{} =
+  val f: Any ->{a} Any = _ =>  // error
+    a.print()
+    ()
+  val x = Transform.app(f)
+  x
+
+def withA[T](body: A => T): T = body(A())
+
+@main def Main() =
+  val t = withA(leak)
+  t.run()