If you had problem payday loans and are wondering if you can now reclaim any money, this page tries to answer your questions.
The best place to start is Can I get a payday loan refund? That describes why the regulator says some payday loans were unaffordable and how to put in a complaint, with template letters to use first to the lender and then to the Financial Ombudsman.
Should I make a claim?
What does “unaffordable” mean?
A loan is unaffordable if you can’t make the normal debt repayment and still be able to pay for the other essentials (rent, bills, transport, food, clothes, other debts etc) that next month. For more details, read Can I get a payday loan refund?
I defaulted on a loan / I am in debt management, can I still claim?
Yes. The lender may offer to write off the outstanding balance or some of it. You may also be able to get other compensation if there were a lot of loans you had repaid.
I only had a couple of payday loans, does this matter?
Two loans, or even one, could have been “unaffordable”. But it is easier to show that loans were unaffordable when you kept borrowing or if you rolled a loan – this is a “pattern” the lender should have spotted. It has to be possible for the payday lender to see that you were in financial trouble.
I have seen several claims where the Ombudsman decided the first few loans, or all small loans, were affordable but made the lender refund interest for the other loans. If you only had a couple of payday loans, then unless your credit record was very bad or you borrowed a large amount in relation to your income then the lender couldn’t see you had problems and there is likely to be little or no compensation.
I had a balance written off, can I claim for other loans?
Yes. This may reduce the amount you are offered but you can still claim. Be realistic – if you repaid one loan then defaulted on the second and had it written off you probably won’t get any more compensation, but if you had a lot of loans before then definitely claim!
I haven’t heard from the lender for years about my default, should I still claim?
Difficult – is it worth waking this sleeping lion? If you had a lot of loans before that you repaid it may be worth doing this.
I haven’t got a list of the loans I had, can I still claim?
Yes. Lots of people haven’t kept records – too painful! – but you can ask the lender to give you a list. It will help you write a better complaint if you can include details such as “I had 9 loans from you over 18 months and they were getting bigger”. If the lender refuses to send you a Statement of Account, read this article which looks at what your options are.
It was over 6 years ago, does this matter?
Normally the Financial Ombudsman only looks at complaints within 6 years from the event complained about. But in November 2016 adjudicators from the Ombudsman started sending out letters to lenders saying they think they can consider all loans because people have only recently found out they can complain. Get your complaint to the lender as soon as possible and then go to the Ombudsman at 8 weeks, even if the lender rejects your complaint and says the Ombudsman won’t look at it.
How many complaints succeed?
There aren’t any published figures. Some lenders pay out on some claims, some seem to reject them all. Many of the rejected claims are then upheld by the Ombudsman. So far most of the rejection I have seen have either been for installment loans or where the customer only took one or two loans from a lender – these are harder cases to win.
The first compensation for a loan that had been repaid that I have heard of was in 2014, when there was a Financial Ombudsman ruling in favour of a Wonga customer who had repaid his loan.
During the last quarter of 2015, more complaints started to be made. The Ombudsman publishes statistics every 6 months, so in July 2016 there should be some figures for how payday loan complaints have increased and how many are upheld.
Can I claim for a Provident loan?
The rule “lenders should not give unaffordable loans” applies to any unsecured lender including Provident and other doorstep lenders such as Oakam, logbook loans and guarantor loans. It is easier to show that payday loans are unaffordable because the repayments are so high. But if your Provident repayments were more than you could afford and your collector kept offering to lend more when you said you had problems it’s worth a try!
I have been insolvent (bankrupt or IVA or DRO) does this matter?
A simple answer is you probably shouldn’t bother to make a claim if you have been bankrupt or in an IVA (though a current legal case may change this for IVAs) and for a DRO you must not make a claim or it could be revoked. This is the same situation as for as for PPI claims.
If I make a claim now, will I still be able to get more payday loans?
If you are currently relying on payday loans, you need to step back and take advice on how to sort this out because getting more loans is digging you deeper into a hole. I suggest talking to StepChange about your whole situation, see How to escape from the payday loan trap for more information. You can still make a claim for a refund for the unaffordable loans you have already had, but you shouldn’t take out any more that you know you can’t repay.
How do I make a claim?
Are there any template letters to use?
There are sample letters on the main article: Can I get Payday loan refund? You should change these so that they tell your story.
Is an email OK?
Emails are best! They cost nothing, are quick, you have a record of when they were sent and you can later send them onto the Ombudsman. Here is a list of here is a list of email addresses for most payday lenders.
My lender doesn’t have a website any more
A good place to start to get an email address is the FCA authorisation register. If that doesn’t show anything, do some sleuthing around with google and find if some other lender has taken over the business, then complain to that lender. If you can’t find anything, talk to the Financial Ombudsman and see what they suggest.
My lender isn’t in the UK
Two major payday lenders, Swift Sterling and Pounds Till Payday were Malta-based. the Financial Ombudsman can’t help with these cases and you have to complain to the Maltese regulator – there is a separate article covering these here.
I don’t know who my payday loans were with
Have a look through your old emails or bank statements or credit reports. You don’t have to know all the details of the loans – the lender will send you those when asked – but you do need to work out which lenders to complain to.
The debt is with a debt collector, who do I write to?
Complain to the payday lender, they are the ones that made the lending error.
How much should I ask for?
You don’t have to calculate a figure, just ask for a refund of interest and charges plus 8% interest – this is how the Ombudsman usually does the calculation.
How long does it take?
It varies a lot. Sometimes a lender replies to some people quickly and takes the full 8 weeks to get back to others. Initially some people got a decision from the Ombudsman in days, but it is now usually weeks.
What the lender may say
The lender said No straight away – should I give up?
Some lenders say no to everyone immediately! It doesn’t mean your claim isn’t good or that the Ombudsman will reject it. You know your situation – if payday loans made your life really difficult, don’t let the lender put you off, take the complaint to the Ombudsman.
The lender has asked for bank statements
You don’t have to supply these but they may help your complaint if you do. Many people don’t have them, as they had to change bank accounts because the payday lenders took so much from their old account. Many people prefer not to discuss things like gambling with a payday lender so they would rather not show these bank statements to a lender.
The lender said they credit checked me and it was fine to lend
I have seen several cases where the lender said they credit checked someone but didn’t spot something obvious, such as bankruptcy or CCJs! If your credit file showed defaults, CCJs or insolvency, this should have been a warning to the lender that you had problems. Also even if your credit file was perfect, you may still have a case for a refund if you borrowed repeatedly from the same lender.
Find out more about when credit ratings matter for payday loan refunds in this article.
The lender says I lied
You may know that you exaggerated your income or missed off some expenses because you were desperate for a loan, or you may feel this accusation is unfair as you don’t think you did. This article looks in detail at some of these situations – you can still win your refund complaint!
I’ve just been sent a really small refund
Wonga and Payday UK / Payday Express are sending out refunds automatically to some people where there have been technical errors with its systems – some of these are as low as £2! If you have already put a complaint in, this isn’t their response to it; if you haven’t perhaps you should? See Wonga’s small refunds for more details.
The lender has asked for more time – should I agree?
Lenders are getting a lot of complaints at the moment so they aren’t processing them all within the 8 week period. If you think you have a good claim, I suggest referring your complaint to the Ombudsman at the 8 week point. The lender will still carry on looking at it – sometimes people receive an offer from the lender after it has been with the Ombudsman for few weeks.
The lender’s rejection ignored my points, should I reply?
If you reply, you have to wait and see what they do next. My reaction would be to go straight to the Ombudsman and make it part of your complaint that the lender didn’t handle your complaint properly.
Could a claims company help me?
These complaints are very individual, it depends on your story. You can do this better than a Claims Management firm because you know all the details. Don’t pay a firm to do a less good job than you could do yourself! If you would like help with a complaint to the Ombudsman, your local Citizens Advice will be able to assist. But the Ombudsman is used to people making complaints themselves, you don’t need “expert” assistance to do this, you don’t need to quote laws and rules, just explain about your payday loans.
Lots of people here have commented how nice the Ombudsman service is to deal with, it’s not hard at all :)
The lender has made me an offer – should I accept?
If you have a list of the loans, try to work out how much interest and charges you paid. If this was several thousand pounds and the lender has just offered to write off a £300 balance, you may not think this is enough. If you think it was £850 and the lender has offered £600 you may think this is fair enough. See Quick Quick refunds for a list of cases where one lender has made very small “goodwill” offers and then people have been awarded ten times as much by the Ombudsman.
The lender may withdraw the offer if you don’t accept it. But if a lender made you an offer then its likely the Ombudsman is going to uphold your complaint!
If you have an outstanding balance and the lender has offered to reduce this, not cancel it completely, read Will the payday lender clear my balance? to see if this is a fair offer or not.
If you go to the Ombudsman, you may have 8% simple interest added, see How to calculate the 8% interest for how to get a rough idea of what this might be without the complicated maths!
if the offer is too low because it is only on a few loans, don’t accept it and then try to take the other loans to the Ombudsman. If you accept an offer, this is in settlement of yyour whole complaint.
Going to the Ombudsman
What do I have to send the Financial Ombudsman?
You can put in your complaint to the Ombudsman by phone, email or by completing a form. Their phone service is very friendly! You could give a list of the loans you had (if you have one), a copy of your complaint to the lender and the lenders reply.
The Ombudsman will ask for anything else that is needed – some people have been asked for a copy of their credit record and bank statements. If you are asked for anything you don’t have, explain and ask if there is anything else that could help. The Ombudsman can help obtain old bank statements that you don’t have.
What is an adjudicator?
The FO has a two stage complaints process. The first stage is handled by someone at the FO with the title of Adjudicator. If either you or the lender rejects the adjudicator’s decision, it is then goes to the second stage where it is reviewed by someone with the title of Ombudsman.
The Adjudicator has suggested an offer – should I accept?
Most people think the decision by their Adjudicator is fair and accepted it. If you aren’t sure how it was calculated, ask about this.
If the Adjudicator seems to have missed a point or ignored some loans, ask about this. Adjudicators do change their minds if you go back and explain things in more detail. The FO process is a dialogue where both sides – you and the lender – can make points and be listened to.
If the lender makes an offer to you and you think this isn’t reasonable, tell the adjuicator why you don’t think it is enough and ask for it to go to the Ombudsman. The lender can’t withdraw their offer in this situation, so you won’t be worse offer by doing this.
What happens about tax?
The 8% interest added on is treated as though you have earned this interest in a bank. I have written an article that explains this tax calculation in detail, including how it will be changing from April 2016.
What about my credit file?
The ombudsman usually tells the firm to delete any records of loans that he considers “unaffordable”. If the lender has made you a cash offer, you could ask them to also delete the credit records if this matters to you. If your credit record is already wrecked with other defaults, there isn’t much point in this.
How long does it take to get the money
It depends on the firm – anything from the next day to a few weeks.
Any more questions?
Ask them in the comments below or on the main payday loan refunds page.