Did payday loans make your finances more difficult or impossible? Those loans may have been “unaffordable” and you should not have been given them. You may be able to claim a refund of the interest you paid.
It’s easy to ask for a refund using the free template letters here. You can use these letters with any payday lender. They work if your loans were repaid on time, or late, or you still owe money.
Two special cases:
- if you are still borrowing each month, read Get help to escape from payday loans because you need to do this first.
- if you defaulted on a loan, complain to the original lender even if the debt is with a debt collector. But there are some important extra bits so also read Payday loan refunds when you still owe money.
The comments below have hundreds of readers’ stories of the payday refunds they have been given. If the lender says No, or offers too little, this article explains how to go to the Financial Ombudsman – it’s easy and many people are getting large payouts!
What are “unaffordable” loans?
If you could only repay payday loans by borrowing again or from a different lender – your payday loans were probably “unaffordable”. The regulator says:
“the borrower should be able to make the required repayments without undue difficulty, whilst continuing to meet other debt repayment obligations and reasonable regular outgoings.”
So for a payday loan to be affordable, you had to be able to repay it the next month and be able to pay your other bills and debts. If any of the following points apply, the payday lender should have realised the loans weren’t affordable and stopped lending you more:
- you often rolled loans or borrowed again soon after repaying a loan;
- your loans from a lender were increasing in size;
- some repayments were late; or
- the loan was a significant part of your income.
Were you treated unfairly?
If you told the lender you had financial problems the lender should have treated you fairly. read Payday loans: what to expect from your lender if you’re struggling which was written by the regulator. That has lists of what a lender should not have done, for example suggesting you roll a loan or borrow more money. If any of these happened to you, add them your complaint.
How much compensation can you get?
If the Ombudsman decides your loans were unaffordable, the question is when should the lender have realised this and stopped lending?
A typical decision by the Ombudsman is to say the payday lender should refund all interest after the third/fourth/fifth loan. This may be earlier if your first loans were rolled or extended a lot.
You aren’t likely to get a “full refund of all interest”, but ask for it and let the Ombudsman decide what is fair.
You don’t have calculate anything for your complaint, just ask for a full refund, see below.
Wonga and some other lenders have already written off some loans. You may still be able to get compensation if you had earlier loans that you repaid. Again just ask for everything and let the Ombudsman decide. Simple!
If you were treated poorly when you told the lender you were in difficulty, then add something like: “I would like to ask for a refund of interest and charges for all the loans I had. I would also like additional compensation for the way you mishandled my situation when I told you I couldn’t repay a loan.”
So how do you claim a refund? There are three steps:
Step One – get the facts about your loans
If you know your loan details (from your emails, bank statements, credit report, or your history on the lender’s website) you can miss this out and write the full complaint letter in Step Two. Do make sure you have a copy of the details on your own PC or printed out – lenders have been known to delete credit records and online histories when someone complains!
To get details of your loans, email the lender (see this list of email addresses for complaints) and say:
To help me explain the details, I am making a Subject Access Request, asking for a list of my loans, showing for each loan when it was taken out, how much interest and charges you added and what I repaid.
If a loan was later sold to a debt collector, please inform me of the date of sale and the name of the debt collector. [delete this sentence if you know none of your loans were sold.]
You should never have given me these unaffordable loans. I am asking you to refund the interest and any charges I paid, plus statutory interest, and to delete any negative information from my credit record.
You are entitled to be sent a list of your loans within one month. This email starts off the affordability complaint – the clock is now running and the lender has to reply to your complaint (not just send a list of loans) within 8 weeks.
Step Two – full complaint asking for a refund
When you have your loan details, you can send in more details about your complaint. This is easy – you don’t need to calculate what refund you should get or quote laws.
Here is a template for you to change or add to. It needs to tell your story because everyone’s case is different.
The repayments to you took so much of my wages that I had to borrow again.
For this period my income averaged about £x a month.
[If you have a family, add some details eg We have two small children. We had child benefit and credits which averaged about £x a month.]
My living expenses were roughly: rent/mortgage £x. Council tax £x. Utilities and bills £x. Transport costs £x. Clothes £x. Food, toiletries, nappies £x. Child expenses £x Other debt repayments £x. Total £x per month.
This shows that there was no way I could afford these loans. When I repaid them, I had to borrow again to get through the next month.
You should have realised from the number of times I borrowed that my debt problems were getting worse. It was not responsible to continue to lend to me. [Add more details eg how often you borrowed or rolled loans if you know them, how the amount borrowed generally went up etc]
[Include/change this if your credit record would have shown big problems: My credit reports would have shown my other debt repayments and problems including late payments/defaults /CCJs/debt management.]
You should never have given me these unaffordable loans. I am asking you to refund the interest and any charges I paid, plus statutory interest, and to delete any negative information from my credit record.
[Include this if some of your loans are over 6 years old: I only found out I could make this sort of irresponsible lending complaint in [April 2018]. I understand the Financial Ombudsman will consider all my loans, including those that are more than 6 years old.]
Add any other points that help tell your story such as:
- “I took out another loan with xxxx to pay you.”
- “Sometimes I borrowed to pay the rent and then had to top-up to get money for food.”
- “After I had rolled the loan twice I was so worried about the interest that I repaid it even though this meant not paying my council tax.”
Don’t worry that the lender will say you should have cut back on your living costs, just put down your normal expenses. You don’t need to include evidence about your expenses.
Some common situations:
If you owe money to the lender, unless you can afford to make this months payment without borrowing again, cancel the CPA to the lender at your bank. Also read the Stop making payments? section in Payday loan refunds when last loan not repaid. If you want to stop payments or to offer a lower affordable amount, add a sentence to your complaint saying this.
If your loan was sold to a debt collector you still complain to the original lender but also tell the debt collector that you are disputing the debt. Just carry on making any payments to the debt collector if they are affordable.
If you only had one or two payday loans from this lender remove the bits about borrowing more often from the sample letter.
Send credit record and bank statements?
Some lenders ask you to send them a copy of your credit record, your payslips or bank statements. If you send bank statements there is no need for payslips.
Some lenders do seem to use them when deciding if the loans were unaffordable and it may make your case more likely to be settled with the lender without the need to send it to the ombudsman.
But some people feel these are personal and they don’t want to send them to a payday lender. If you don’t want to send them, tell the lender you will send the Ombudsman any information that is needed.
Step three – go to the Financial Ombudsman
If the lender rejects your complaint or offers you a small amount, don’t be depressed – you may still have a good case, they are just hoping you will go away quietly!
Thousands of these cases have been sent to the Financial Ombudsman and there is a higher success rate for payday loan affordability complaints than any other type of complaint!
And as one reader said, They couldn’t be any nicer.
Should you give up or go to the Ombudsman?
Think about sending your complaint to the Financial Ombudsman if:
- the lender rejects your complaint or doesn’t reply within eight weeks;
- the refund offered is too low; or
- they refuse to consider loans over 6 years old or which have been sold to a debt collector.
Some lenders try to make your case sound bad when it isn’t. People have had thousands of pounds refunded after a complete rejection! Ignore any of these:
- they relied on your loan applications and you didn’t give the full facts – see Lender says I lied for more about this;
- you repaid some loans early – so what? this doesn’t prove the loans were affordable, just that you were trying to save interest;
- your borrowing didn’t go up every time – also irrelevant, what matters is that you kept borrowing;
- you had a good enough credit score or they didn’t legally have to check your credit record.
Deciding if an offer is good enough
If you are offered a refund on only a few loans, don’t accept if you think you paid a lot more than that in interest.
Knowing how much you paid in interest helps you decide if an offer is reasonable or not. Some lenders offer a few hundred pounds to cases which eventually get ten or twenty times as much from the Ombudsman.
If you aren’t sure, ask in the comments below this article. Accepting an offer settles your whole complaint – you can’t change your mind later.
Don’t worry that you will “lose” a small offer from a lender – this doesn’t happen.
An offer to write off your current balance may be good or it may be very poor as you should get a refund as well, see Refunds when you have a balance owing for details.
If getting defaults or late payments removed from your credit record is important to you, make sure you understand and are happy with what the lender is proposing to do before you accept an offer.
It’s probably pointless if you only had one loan from a lender, not rolled, which you repaid on time. There isn’t much point in taking every case to the ombudsman.
Don’t delay too long – there is a 6-month time limit after a lender rejects your complaint to send the case to the ombudsman.
How the FO works
The Financial Ombudsman has a two-stage process. The first level is a FO member of staff called an Adjudicator. The Adjudicator will come to a decision, but unless both sides accept it, the case goes to the second stage where it is considered by an Ombudsman. Most complaints are settled at Adjudicator level – there are 10 times as many Adjudicators as Ombudsmen.
How to send a complaint to the FO
Caroline Wayman, the Chief Ombudsman, says:
It’s really OK to phone up and say, ‘I don’t think it was fair.” It’s not court; you don’t have to turn up with your ‘heads of claim’, you don’t have to write a fancy letter. Tell us your story and we will do the rest.
Their website explains the different ways to send a complaint to the Ombudsman. I like the “do it online” option which takes you through your complaint step by step and you can attach other information, such as the reply you have had from the lender. You could add some more details, for example, if you disagree with what the lender replied to you.
Put in a separate complaint about each lender.
If some loans are more than six years old, add a bit explaining why you are complaining now, not years ago. Most people knew they were in financial trouble when they were borrowing but had no idea that they could make an irresponsible lending complaint. So say how and when you found out that an affordability complaint was possible (a friend sent me a link about this, I saw it mentioned on Facebook, whatever).
What happens after you have sent a case
You will normally be contacted within a couple of weeks. If you didn’t supply a copy of your credit record and your bank statements you will be asked to send these.
You can still get bank statements even if your account is closed. If your bank wants to charge you a lot, say you need them for a complaint at the ombudsman about a payday lender and many banks will reduce the charge.
This initial contact is not when an adjudicator picks up your case and starts looking at it. That won’t happen until the payday lender has replied – typically it is between 8-14 weeks at present.
A few problem cases
- Don’t apply if you are bankrupt now or have been bankrupt in the past – any refund will go to the Official Receiver, not you.
- Don’t bother if you are in an IVA as refunds will go to your IVA firm not to you. If your IVA has finished the refund may still be sent to your old IVA firm or it may be sent to you.
- Don’t apply if you are in a DRO now, getting a refund may mean your DRO is cancelled!
- You can’t go to the Ombudsman with non-UK authorised lenders – the main ones were Swift Sterling and Pounds Till Payday, see that article for your options.
Need some help?
If you need help to complain, go to your local Citizens Advice, they will help for free.
Don’t use a claims management company. They are expensive and may be incompetent. A good claim involves telling your own story, not sending a standard letter!
Check out the Comments below – you could ask a question there. The comments are split into pages – use the “older comments” and “newer comments” buttons at the bottom to read them all.
Examples of gambling & payday loan refunds
What to put in an affordability complaint
how long do different payday lenders take?
ash says
Sara, last week the Adjudicator ruled in my favour that 32 out of 40 loans with Wonga were irresponsible.
Wonga have since come back and not agreed with the outcome, and written a load of nonsense about how they could never detect problem gambling etc, or other payday loans that have not been disclosed at time of application, although admitted, most applicants are unlikely to declare this when applying for a payday loan.
They then accepted 4 loans were irresponsible and made me an offer of £500. I would be due much more should the 32 loans the adjudicator ruled irresponsible get settled. Do you think its wise to take this to ombudsman for a final decision, and is there now chance that if the ombudsman rules in Wongas favour I will receive no refund at all?
Sara (Debt Camel) says
Yes, I do think you should go to the Ombudsman. Borrowing 40 times should have been a HUGE warning to Wonga that something was very wrong and they should have stopped lending or looked into your situation more carefully – if they had asked to see your bank statements they would have noticed the gambling!
The most common decision by the ombudsman is to agree with the adjudicator. Sometimes the ombudsman makes a small change – perhaps saying you should have 25 loans refunded – or 35! It is VERY rare for the ombudsman to make a very different decision and they never seem to say less than what the Wonga has offered here, so you aren’t going to risk the £500 by going to the ombudsman.
Nat Garvey says
It has taken Wonga 2 and a half weeks to decide that my loans were affordable; but they have decided to refund 5 out of 6 loans (with 8% interest). I have accepted the decision today as there is only a difference of £20 or so from my own calculations. If it wasn’t for Sara and this website, I wouldn’t have even known this was possible. I have several complaints, some are still with lenders and some have gone to the FOS. The money will be going straight on to my outstanding debts.