How to Check if a Payday Loan Was Mis-Sold (and Reclaim the Interest)

Payday lenders were meant to check you could actually afford to repay before handing over cash. Plenty did not. If a lender lent to you without properly assessing your finances, or kept lending while you clearly could not cope, the loan may have been mis-sold. The good news is you can complain yourself, for free, and if it is upheld you get back every penny of interest, fees and charges you paid on top of what you borrowed.

Reviewed by Corey Musa, Founder·Last reviewed June 2026·LinkedIn

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Your rights

Under the FCA's Consumer Credit sourcebook (CONC chapter 5, with the creditworthiness rules now set out in CONC 5.2A), a lender must assess your creditworthiness and affordability before agreeing a regulated credit agreement. That means checking your income and your regular outgoings, not just whether you could scrape together one repayment. If they failed to do this, or the checks they did clearly showed the loan was unaffordable, the lending was irresponsible. The standard redress is a refund of all interest, fees and charges you paid, plus 8% simple interest a year on those amounts. You still owe the original sum you borrowed. If the lender says no, or does not give you a final response within 8 weeks, you can take it to the Financial Ombudsman Service for free.

Step by step

1List every payday loan you took with the lender and note any signs of trouble: borrowing again soon after repaying, rolling loans over, loans that swallowed a big chunk of your income, or borrowing from several lenders at once.
2Request your statement of account and any records the lender holds. You can ask for these directly, and you can also send a free Data Subject Access Request to get the affordability checks they ran.
3Send a written complaint to the lender saying the loans were unaffordable and that the affordability checks fell short of CONC requirements. Ask for a refund of all interest, fees and charges plus 8% simple interest a year.
4If they reject it, or 8 weeks pass with no final response, refer your complaint to the Financial Ombudsman Service using their free online form. You do not need to quote any law; just send them what you sent the lender.

What they'll say, and your comeback

“You passed our credit check at the time.”

Comeback, A credit check alone is not enough. CONC 5 requires a proportionate assessment of whether the loan was actually affordable for me, including my regular outgoings, not just whether I had a pulse and a credit file.

“You always repaid on time, so there was no problem.”

Comeback, Repaying on time often meant borrowing again straight away to cover the gap. A pattern of repeat borrowing is exactly what the Ombudsman treats as a sign the lending was unaffordable.

“The loan is too old for us to look at.”

Comeback, There is no automatic cut-off for affordability complaints. If you kept lending to me repeatedly, the Ombudsman can still consider the whole chain. Please issue a final response so I can escalate.

FAQ

Does complaining cost anything?

No. Complaining to the lender and escalating to the Financial Ombudsman Service are both free. You never need a claims company, and if you use one they take a cut you could have kept.

What if the lender has gone bust?

If the firm is in administration you usually cannot get a cash refund, but you can register as a creditor in the administration and may receive a partial payout. Check whether the loan has been sold on, as the debt buyer may still be chasing it.

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A self-serve tool, not a law firm. General information, not legal advice.