Did your payday loans cost so much you had to keep on borrowing?
The regulator will say your loans were unaffordable and this was irresponsible lending.
You can get a refund of the interest you paid on unaffordable loans.
It’s easy to ask for a payday loan refund using the free template letters here. The letters work if your payday loans were repaid or if you still owe money.
This article covers everything you need to get started. What “unaffordable” really means, how to complain to the lender, the email addresses to use, and what to do if the lender doesn’t give you a good refund. It’s easy and many people are winning large payouts.
The comments below this article have thousands of stories of the refunds people have got using these letters. It is a great place to ask questions!
Which lenders can you get refunds from?
Use these letters here to make an affordability complaint to any UK payday lender including:
QuickQuid, Myjar, Lending Stream, Sunny, Peachy, Satsuma, Wageday Advance, Mr Lender, Moneybox 247, Safetynet Credit, Payday Uk, Payday Express, the Money Shop, Pounds to Pocket.
Wonga is the big exception – read Wonga – latest news of refunds which says what to do.
Some payday lenders gave up a few years ago. You can’t get refunds back from them. Check out this list of payday lenders to see which ones you can complain to.
(For other high-cost loans, including Provident, Amigo, 118 Money, Everyday Loans etc, see Refunds for non payday loans where there are different template letters.)
What are “unaffordable” loans?
Was a loan affordable because you managed to repay it? No! If paying a loan left you so broke you had to borrow again – from the same lender or a different one – it was 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.”
That means a payday loan is only affordable if you repaid it on time and you could pay your other bills and debts.
Payday loans are meant to be used to solve a short term problem. If you kept rolling a loan or repaying one then getting another loan soon after, the lender should have realised you were in difficulty and stopped lending to you.
Many lenders ignored even very obvious signs of problems such as your loans increasing in size, borrowing very soon after repayment, late payments, or lending a very large amount of your income!
How much compensation can you get?
In 2018-19, the Financial Ombudsman will see 50,000 payday loan affordability complaints. So we know what sort of decision is made about what a fair refund is.
A typical decision by the Ombudsman is to say the payday lender should refund all the interest you paid interest after the third/fourth/fifth loan. This is because payday loans are meant for short term problems and the lender should not have carried on giving you loans.
This may be earlier – from the first or second loan sometimes – if your first loans were rolled or topped-up or were very large.
You don’t have calculate what a fair refund is. Just ask for a full refund from the lender and see what you are offered. This is the simplest and best approach.
So how do you claim a refund? There are three main steps. I expect you want to dive in, but first:
Before you send in a complaint
Begin by getting a copy of your Noddle credit report. After complaints are started, sometimes loans are deleted and you may want the full report if you later have to go to the Ombudsman.
If you can log-in to the lender’s website and see your loans, take a copy of them as sometimes they vanish when you complain.
If you still owe money to the lender:
- unless you can afford to make this month’s payment without borrowing again, cancel the CPA to the lender at your bank. Otherwise the lender may take the money and you will be in a mess.
- read the Stop making payments? section in Payday loan refunds when last loan not repaid. If you want to offer a lower affordable amount, add a sentence to your complaint letter saying this.
- if you have a lot of borrowing at the moment, read Escape from the payday loan trap which looks at how a debt management plan can help you.
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. Don’t skip this bit or a debt collector may go to court. It is a good idea to carry on making payments to the debt collector if they are affordable.
Step One – get the facts about your loans
Next ask the lender for your loan details.
If you know enough from your emails, bank statements, credit report, or your history on the lender’s website you can miss this out and go straight to Step Two.
To get details of your loans, email the lender (see this list of email addresses for complaints) and say:
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.
Good ways to improve your letter
Add any points that help you describe what happened to you. And delete any bits that don’t matter to you. Some examples:
- “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.”
- If you only had one or two payday loans from this lender remove the bits about borrowing more often from the sample letter.
- If you weren’t treated fairly while you were borrowing add a bit about this. See 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, mention them in your complaint.
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.
Send credit record and bank statements?
Some lenders ask you to send them a copy of your credit record, your payslips or bank statements. This is mostly to be difficult – the lender can check your credit record themselves if they want.
Don’t send payslips – they won’t help an affordability complaint and the ombudsman never asks for them.
You can send bank statements if you want, but think twice about the cost of copying and postage if there are a lot. Some lenders do seem to use them when deciding if the loans were unaffordable but others just ignore them.
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 Service (FOS)
If the lender rejects your complaint or offers you a small amount, don’t be depressed. You may still have a very good case, they are just hoping you will give up!
Instead you can send your case to the Financial Ombudsman. This is easy and free.
Tens of thousands of these cases have been sent to the Financial Ombudsman where there is a higher success rate for these affordability complaints than any other type of complaint!
Give up, negotiate with the lender, or go to the Ombudsman?
Some lenders try to make your case sound bad when it isn’t. People have had thousands of pounds refunded after a complete rejection! Just ignore any of these comments, they do not mean you have a weak case:
- 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 – this doesn’t prove the loans were affordable, just that you were trying to save interest;
- your borrowing didn’t go up every time – 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.
- your loans are over 6 years old – the ombudsman will look at these even if the lender says they won’t!
Will a lender improve an offer?
You may be wondering if you should go back and try to get the lender to give you a better offer. Most lenders won’t do this, but a few may if you make out a good case, for example if they have offered to refund some loans and you would be happy if they included one or two more, you can say why you think lons 3 and 4 should also be refunded. See When and how to negotiate about payday loan refunds for more details.
A good enough case to go to the Ombudsman?
If you don’t know what to do, 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 by going to the Ombudsman – this doesn’t happen.
Points to think about include:
- 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. Some lenders offer a few hundred pounds to cases which eventually get ten or twenty times as much from the Ombudsman.
- An offer to write off your current balance may be good or it may be very poor if you should get a refund as well, see Refunds when you have a balance owing for details and ask in the comments below if you aren’t sure.
- If getting defaults or late payments removed from your credit record is important to you, are you happy with what the lender is proposing to do? Don’t assume your credit record will be cleared if the lender didn’t mention this.
One or two loan cases are hard to win at the ombudsman. It’s probably best to give up unless:
- the loan was rolled or topped up several times; or
- the loan was large. Here is a single MyJar loan case that was won even though it was an instalment loan and the borrower had a good income because it was for £3,600. And a single loan Sunny case for a loan of £1,000. You can win cases for smaller amounts if the repayment would have been a large amount of your income; or
- you still owe money.
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 to send a complaint to FOS
Put in a separate complaint about each lender. So you don’t have to wait until all your lenders have replied before sending the first one to the Ombudsman.
One reader said: They couldn’t be any nicer. 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 can add more details, for example, if you disagree with what the lender replied to you.
Make sure you include a paragraph about having only just found out you could complain if some of the loans are more than 6 years old.
If you have your bank statements, it is a good idea to attach these to your complaint. Ideally you want statements from 3 months before your first loan until the last loan was repaid or you defaulted on it. This strengthens your case, showing how unaffordable the loans were. You can still get bank statements even if your account is closed – if you don’t have them, start the process of getting them now, don’t wait until they are needed!Also attach a copy of your Noddle credit report.
What happens after you have sent a case
You will normally be contacted within a couple of weeks and asked for a copy of your credit record and your bank statements if you haven’t sent these. If you have sent these on one complaint, then when you complain about a different lender they will use the ones they already have.
After this initial contact your case will wait for the lender to send FOS your case file and then wait to be picked up by an adjudicator who will make a decision on it. That won’t happen until the payday lender has replied – typically it is between 4-6 months at the moment.
The Financial Ombudsman has a two-stage process. Most cases are settled by the adjudicator but about 10% go to the send “Ombudsman” stage, see What happens at the Financial Ombudsman for details.
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 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.