Reclaim a Mis-Sold Payday Loan (Irresponsible Lending Refund)
Before a payday lender gives you a loan, FCA rules require them to check that you can realistically afford to repay it without borrowing again or falling into hardship. If you took loan after loan, kept rolling them over, or were lent amounts that clearly didn't fit your income and outgoings, the lending may have been irresponsible. If your complaint succeeds, you are typically refunded the interest and charges you paid (plus 8% simple statutory interest), and any related adverse entry can be removed from your credit file. You send the claim yourself and keep 100% of any refund.
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The FCA's Consumer Credit sourcebook (CONC), particularly the creditworthiness and affordability rules in CONC 5, requires lenders to carry out a reasonable and proportionate assessment of whether repayments are sustainable for you. If a lender failed to do this and lent unaffordably, complain to the lender first. You can refer the complaint free of charge to the Financial Ombudsman Service (FOS) once the lender issues its final response, or once 8 weeks have passed without one. FOS can order refunds of interest and charges plus 8% simple statutory interest and credit-file correction. Note that several payday firms (such as Wonga, QuickQuid and The Money Shop) entered administration, so claims against them are handled by the administrator rather than FOS, those claim windows have generally now closed, and any payouts are only a small fraction of the amount owed.
Step by step
- 1Gather a list of every loan you took from the lender, with approximate dates, amounts borrowed and how often you topped up or rolled over. If you don't have records, ask the lender for a full statement of account or submit a Subject Access Request.
- 2Write to the lender's complaints team stating you believe the lending was irresponsible and unaffordable, that they did not carry out a reasonable and proportionate affordability assessment under CONC 5, and that you want a refund of all interest and charges plus 8% statutory interest and removal of any related adverse credit data.
- 3Give the lender up to 8 weeks to issue a final response. Keep dated copies of everything.
- 4If they reject the complaint, offer too little, or miss the 8-week deadline, refer it free to the Financial Ombudsman Service. You normally have 6 months from the date of the lender's final response to do so. If the lender is in administration, check whether a claims scheme is still open with the appointed administrator.
What they'll say, and your comeback
“You passed our affordability checks at the time, so the loan was sold correctly.”
Comeback, A credit-scoring tick-box is not the same as a reasonable, proportionate affordability assessment under CONC 5. Repeated borrowing, rollovers and a pattern of using new loans to repay old ones should have shown the lending was unsustainable.
“The loans are too old for us to look at.”
Comeback, There is no fixed cut-off that automatically bars an affordability complaint. The Ombudsman has confirmed it can consider loans more than six years old, and time limits run from when you reasonably ought to have known you had cause to complain, not from the loan date.
“You always repaid on time, so there was no harm.”
Comeback, Repaying on time doesn't prove affordability; many people repay by cutting essentials or borrowing elsewhere. The test is whether repayments were sustainable without hardship, not whether they were eventually made.
FAQ
What can I get back?
Typically the interest and charges you paid on the unaffordable loans, plus 8% simple statutory interest per year, and removal of any related negative marks on your credit file. You don't usually get the original loan principal back, since you did receive that money.
What if my lender has gone bust?
Several payday firms (Wonga, QuickQuid, The Money Shop, Sunny) entered administration. You can't use FOS against them; instead a claim has to be registered with the administrator. Most of these claim windows have now closed and approved claims were paid at only a small percentage of their value, so check the administrator's current position before assuming a route remains open.
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