YOU MAY HAVE A CLAIM FOR COMPENSATION

Claim a Payday Loan Refund

If you’ve ever had a payday loan that you couldn’t afford to repay, you may be entitled to £100’s or even £1,000’s in compensation. Some payday lenders are now going into administration which means you get back less compensation than what you could be owed.

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Why are payday loans flawed?

Originally payday loans were created for short-term ‘emergency’ borrowing of £100 to £1,000 until next payday. Unfortunately many borrowers were given loans they couldn’t afford to pay back and then given subsequent ‘top-up’ loans far too easy due to improper checks by the lenders. This meant many payday loan borrowers easily accrued huge amounts of interest which they were unable to pay back.

In this section

› Payday Loans

› How to check you had a payday loan

› The companies you can claim against

› Checking you have a valid claim

› The legal bit

› The evidence you need

› Common questions

› Typical claim payout

How to check you had a payday loan

You can quickly check to see if you had a payday loan by following these simple steps.

Check your email

Search for the names of payday loan companies you think you may have used in the past. If you find any emails, search for keywords like ‘credit’, ‘loan’ and‘ statement’. If the company is emailing you statements of your account it’s proof you have a credit account with them.

Search your credit record

Use this free credit check tool to check your credit history for the last 6 years. See if any credit was ‘repaid’. Remember you can still get compensation from loans older than 6 years and even if the loan hasn’t been repaid in full, although it’s likely to be much less.

Check your bank statements

Looking through your old statements is often an easy way to find out if you had a loan. Don’t worry if you no longer have them, due to GDPR regulations you can request a copy by submitting a Subject Access Request (SAR) to the bank. Once you have them look for money going in and then money going out each month (a typical pattern for loan or credit facility).

This unorthodox lender offers ongoing credit solutions much like a credit card. If you’ve had an unaffordable loan from them, you may be able to claim.

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Visit lender page ›

Unfortunately you can’t claim against these lenders

The deadline has passed for these lenders or they have either gone into administration.

The deadline has expired

Wonga, Wageday Advance (and Speedy Cash), Money Shop, Payday UK, Payday Express.

These lenders have stopped trading or gone into administration

MyJar, Microlend, Toothfairy, Capfin, Trusted Quid, Fancy a Payday, Response Lending

These lenders have just disappeared

Access Fast Money, Cash Genie, Cheque Centre, CFO a.k.a. Payday First, Flexible First, Money Resolve, Payday Advance, 1st Stop, 321 Cash, Bonga Loans, Cash Choice, Cash Store, Cash 365, Dosh Loans, Different Money, Easy Finance Club, Forces Loans a.k.a. V Gates, Handycash, Lifeboat Loans, Money In Advance, Mini Credit, Open Door Loans, Payday First, Payday Overdraft, Perfect Payday, Pick A Payday, Pixie, Pogo Loans, Prime Payday, Purple Payday, Quid 24, Speed Credit, Speed-e-Loans, Speedy Dosh, Txt Me Cash, Umbrella Loans, Vivus.

Checking you have a valid claim

If you can relate to any of the below you may have claim:

Fees or charges not clear?

When you took out your payday loan were the charges and associated fees made absolutely clear to you?

Unable to pay bills?

Your payments for the payday loan were so large that you struggled to pay for your monthly essentials like bills or mortgage payments.

Rolling over credit?

You had to take out a further payday loan to pay the initial one back, supporting unaffordability.

Lenders taking automatic payments?

Did the payday loan company take automatic payments from your account without telling you that put you in financial difficulty to pay other essentials.

Encouraged to borrow further?

Did the payday loan company advertise ‘good customer’ offers that promoted regular use and the ability to get better deals the more you borrow?

Unfair lending

Despite clearly not being able to pay the first loan back, did your payday loan lender continue to offer more through debt consolidation?

If you can relate to any of these points you may have claim and should complete our 5 minute form now:

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The Legal View

“Rules imposed by the Financial Conduct Authority mean any firm offering credit has an obligation to check your financial situation to make sure you could afford the credit they were providing, before giving it to you.”

Key Fact

The Financial Ombudsman Service (FOS) reviews complaints made about firms by checking if their terms and conditions were applied fairly – and whether any charges were clearly explained.

The legal bit

The basis of any claim is split into two arguments. First, did the lender properly assess your 'creditworthiness' before lending to you know as 'unaffordable lending'? Second, how did the lender treat you known as 'unfair treatment'.

Unaffordable Lending - “Assessing Creditworthiness”

The FCA sets out in Chapter 5 of the Consumer Credit sourcebook (CONC) that before anyone enters into a regulated credit agreement, they must first be assessed for ‘creditworthiness’. This ‘assessment’ must be repeated for any ‘significant’ increase in credit or credit limit given in the future (CONC 5.2A.4 ). The FCA does not prescribe what checks should be made by firms, it just says checks should be ‘reasonable’ and ‘proportionate’ to the type and amount of credit, it’s cost and the customer’s financial position (CONC 5.2.3G ); this is called the firm’s “affordability risk”.

What checks the firm should carry out are covered in CONC 5.2A.20R (Scope, extent and proportionality of assessment). The FCA does state that creditworthiness checks should take into account (where appropriate) information from the customer and credit reference agency (CONC 5.2A.7R )

Repayment Checks

A firm must consider the customer’s ability to make repayments from:

Income
Income from savings
Savings or other assets indicated to be used to repay the debt
Without having to borrow more to meet repayments
Without failing to make other payments contractual obliged to meet
Without the repayments having a significant adverse impact on the customer’s financial situation.

Assessing Income

The firm must take reasonable steps to determine the amount, or make a reasonable estimate, of the customer’s current income and reasonably foresee a likely drop in future income. For the purpose of considering the customer’s income under CONC 5.2A.15R it is not generally sufficient to rely solely on a statement of current income made by the customer without independent evidence (for example, in the form of information supplied by a credit reference agency or documentation of a third party supplied by the third party or by the customer).

Assessing Expenditure

Non-discretionary expenditure referred to in CONC 5.2A.17R includes payments needed to meet priority debts and other essential living expenses and other expenditure which it is hard to reduce to maintain a basic quality of life. It also includes payments the customer has a contractual or statutory obligation to make, such as payment obligations arising under a credit agreement or a mortgage contract.

Use of Credit

The FCA states (CONC 5.2A.21G ) that firms ‘may’ have ask how the customer intends to use the credit. Debt consolidation loans are allowed, but this shows existing financial difficulty which should spark further creditworthiness checkers by lender. The FOS has ruled in the past in favour of claimants where this information was provided and not acted upon.

Extended Credit

If the lender encouraged you to borrow further with ‘good customer’ offers or didn’t inform you of the risks of borrowing more or didn’t check your affordability to increase your limit, you may have a claim.

Unfair Treatment - “How the lender acted”

The list below sets out additional grounds to complain if you felt the lender retreated you unfairly.

Fair treatment

If you felt pressured to extend your loan or if you felt the lender didn’t listen to you or deal with you “sympathetically and positively”.

Repayment Plan

The lender didn’t freeze charges or you were unable to make payments under a reasonable repayment plan.

Key Facts

The lender should have provided you with a Key Facts Document that details in simple terms all the information you needed to know before signing any agreement, if they didn’t you could have a claim.

Use of Debt Collection

If your lender resorted to using a debt collection agency without first talking to you and trying to create a repayment plan.

No Late Payments Warning

The lender didn’t warn you in their advertising or personal communication what would happen if you missed repayments.

No CPA Warning

The Continuous Payment Authority (CPA) didn’t give you prior warning that it was going to take money from your account.

The evidence you need

All you have to do is show that your payday loan company acted ‘irresponsibly’ in providing you with a loan that could not be repaid without ‘undue difficulty’. Get a list of all your payday lenders that you think qualify and then write down how much you earned each week or month. After that, detail all your expenses like rent and utility bills (electricity, gas and water) as well as council tax, broadband, mobile phone, car and home insurance, grocery, clothing, childcare, other debts and outgoings. Finally, write a letter to each lender including this information explaining that your loan was unaffordable and ask for a refund.

But don’t worry if this sounds daunting, we do all this for you. Claim online by filling out our form and let our experienced claims team handle the headache and hassle for you.

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Did you know?

On average, the uphold rate for payday loan redress claims is 51%.

FOS Quarterly Complaints Data (Q2 2021/22)

Common questions

How successful are payday loan claims?

On average the success rate for claiming against payday loan lenders currently sits around 51%. That means 5 out of 10 people whose claim is reviewed by the FOS are successful. Many claims don’t get referred and get settled by the lender directly.

How much can I get?

The law says how much you get is dependent on what your financial situation would be now if you had been treated ‘fairly’ and ‘responsibly’ in the first place by the lender. Claims range from £100’s to £1000’s and are calculated by working out all the interest, fees and charges you paid and then adding a statutory 8% interest rate for each year you had the loan. An example payout could be “If you had a £1,000 refund in fee, charges and interest you would also get £1,000 x 8% = £80 x 4 years = £320. That means in total including compensation you would get £1,320”

What does the Financial Ombudsman Service (FOS) say?

The official line is that payday loans are intended for short term borrowing only. If a lender continued to give you loans then this wasn’t ‘short-term’ borrowing. If the claim is not settled directly with the lender then the FOS is likely to ask the lender to refund you all the interest you paid after the third, fourth or fifth loan. However, if your first loan was substantial or if your first loan was ‘rolled over’ you could get a refund from just that one.

Can I claim if they have gone bust?

Yes, although it’s likely you will get back substantially less than what you were owed. This is because when a lender goes into administration you’re defined as an ‘unsecured creditor’ and at the mercy of the administrator. The size of the refund is dependent on how much money the administrators can get from the business and how many creditors it has to be shared between. If you think you may have a claim, it’s important not to hang around, so check now.

Typical claim payout

The law says how much you get is dependent on what your financial situation would be now if you had been treated ‘fairly’ and ‘responsibly’ in the first place by the payday loan company. Claims range from £100’s to £1000’s and are calculated by working out all the interest, fees and charges you paid and then adding a statutory 8% interest rate for each year you had the loan.

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Example Calculation

“If you had a £1,000 refund in fee, charges and interest you would also get £1,000 x 8% = £80 x 4 years = £320. That means in total including compensation you would get £1,320”

Don’t Delay. Check Now.

Don’t miss out on £100’s or even £1,000’s in compensation you could be entitled to. Checking only takes 5 minutes, so why not do it now?

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