I have been encouraging people to send a simple template letter to ask for a payday loan refund if they were given payday loans they could only repay if they then borrowed again.
And often people get template letters in reply – the lender just copies a standard rejection filling in the number of loans.
Is this the point you should go back and try to negotiate with the lender to get a better offer? Or should just send a good case to the Financial Ombudsman?
Some lenders listen to what you have to say and some don’t. Here are my tips for when to negotiate and what to say – but whether they work will depend on the details of your complaint!
Don’t negotiate from the start
Most lenders are struggling with the number of affordability complaints they are getting. To try to manage the numbers, they have set up standard processes – these don’t include someone studying your complaint in details and considering how reasonable an offer from you is. So keep things simple, send a standard complaint at the start.
Then wait until you get a response. It won’t speed up the response if you go back after a few weeks and say you will accept less than you asked for at the start – they aren’t thinking hard about your case, no one has yet looked at it.
Which lenders negotiate… and which don’t
Lenders that are prepared to listen to an argument that their offer should be improved include: Mr Lender, MyJar, SafetyNet Credit.
I haven’t heard recently of anyone having success at negotiating with Lending Stream; Satsuma, Uncle Buck.
Sunny’s response usually says it is final but you can go back with further evidence – but they never seem to change their mind about the size of the refund, although they will agree to delete defaults if you ask.
With any of the non-negotiators, it is only worth going back to them after a final response if you think they have clearly made an error about the loans you had eg it refers to your borrowing in 2013 when you know all your loans were in 2016 say. Even if you know you have a good case, you are just wasting your time – send it to the Ombudsman.
The easiest negotiation – getting an improvement to an OKish offer
With lenders that will negotiate, the easiest situations are where they have made an OK but not good offer. If you paid £2000 in interest and they just offer to write off your current balance of £150, that is nowhere close to being reasonable and a lender isn’t likely to bring it up to a reasonable level, so there is no point in wasting time trying to get them to do this.
But if you would accept their offer if they include one or two more loans, or if they add 8% interest then you are a lot more likely to succeed.
If you are insistent that you should get a “full refund” of all your interest, that isn’t negotiating – it’s just repeating what you originally said. It isn’t likely to work.
So think what you would be prepared to accept and remember the ombudsman doesn’t often refund the first few loans. If there is some reason (the number of rollovers? the size of the loan?) why you think the first one or two loans should be refunded you are probably going to have to take the case to the Ombudsman.
Look at the details
Start by being clear what their offer is
- Exactly which loans are they planning to refund?
- Have they added 8% statutory interest?
- Are they going to delete negative information from your credit record?
If there is a balance outstanding on a loan, read Refunds where you still owe money and work out if they are including the last loan in the refund? If they are, they should deduct interest from this. A refund of £100 and to write off a balance of £500 this may sound good – but it may not be as generous as it sounds if a lot of that £500 is interest… If you aren’t sure, ask in the comments on the main payday loan refund page.
Know your facts!
- work out the gaps between your loans – the time from repaying one loan to taking the next one out;
- were any of the loans rolled or deferred?
- work out how much interest you paid on each loan.
If the lender still hasn’t sent you a list of the loans so you know these details, reply that you need the list in order to be able to consider their offer.
Give reasons for what you are suggesting
Use the facts to make a reasoned argument.
Rather than “I’ll settle the balance if you up the £250 offer to £500” it’s a stronger approach to say “I think you should also be refunding loans 3 and 4. Loan 3 was taken out only 5 days after I repaid loan 2 and was a lot larger than loans 1 and 2. Loan 4 was a bit smaller than loan 3 but was taken out the same day as loan 3 was repaid.”
If you are saying the lender should have seen all your other borrowing from your credit record and that this was getting worse, supply a copy of your Noddle credit report with your email.
You could also set out in detail what they would have seen: ” When I applied for the third loan in November 2016, my credit record would have showed that I had 4 outstanding payday loans and that I had missed payments to credit cards and loans in the previous 6 months. My position had clearly got significantly worse than when I applied for loan 2 in August.”
Obviously if you had 18 loans you don’t have to do this for each loan – concentrate on the first couple of loans where you think your refund should start.
Point out errors or add explanations
It’s a good idea to point out any errors in what the lender said. For example: “You said there was a 14 month gap between loans 12 and 13 which shows I wasn’t dependent on you. But during this time I made two loan applications to you which were rejected so you know I was still in difficulty.”
If the lender says you repaid loans early, point out you had to borrow again very soon afterwards, so this was not a sign that the loans were affordable.
Don’t bother to say what a case going to FOS costs
It costs the lender £550 for every complaint that is sent to the Financial Ombudsman after the first 25 in a year which are free. There is no point in you telling the lender this – they already know it.
You may think it’s logical that they should settle your small complaint for £180 say rather than pay £550 if you go to FOS. But the lender knows that most people don’t bother to send small cases to FOS, expecting to lose them. And any lender that agreed to settle every complaint for a few hundred would soon be broke.
This doesn’t work.
Don’t bother to say you won’t go to FOS if they delete the credit record
You may have repaid the loan years ago and all you want is the default off your credit record. A few people settled complaints like this in early 2016 when there were few of these complaints and they were being treated as one-offs. But lenders now have standard policies to deal with the volumes of complaints and I haven’t heard of this approach working for a long while.
Your only realistic hope of getting a default removed is by winning an affordability complaint and getting a refund at the Ombudsman.
Do set a time limit
You don’t want this to drag on for weeks. I suggest asking for a reply within a week or you will be sending your case to the Financial Ombudsman.
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Ask any questions on the main payday loan refund page. as more people will see it there.