What Happens After You Make A Claim
Once a claim is upheld and an offer is accepted (or a binding FOS final decision is accepted), the focus moves from arguing the case to making sure the redress is calculated, paid and recorded properly. There are several moving parts — the refund itself, the 8% statutory interest, application of the refund against any outstanding balance, credit-file updates, and the tax position. This page walks through each of them.
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Acceptance and the 28-day window
When you accept an offer in full and final settlement, or accept a binding FOS final decision, the lender typically has 28 days to pay the cash element of the redress. The application of the refund against any outstanding balance is usually done at the same time, and credit-file updates follow shortly after.
Read what you are accepting carefully. A “full and final” settlement letter closes the matter and prevents you from coming back later for more. If you are accepting only part of an offer (for example, accepting redress on some loans in a sequence while disputing others), make sure the wording reflects that.
How the redress is paid
The components and the order they are typically applied:
- Refund of interest, fees and charges — calculated for the period the lending was unaffordable.
- 8% simple statutory interest — added on top, calculated from the date each charge was paid until the date of settlement.
- Application against any outstanding balance — if you still owe the lender money on the unaffordable account, the refund is normally used to reduce or eliminate that balance first.
- Surplus paid out — if the refund exceeds the outstanding balance (or the account is closed), the difference is paid to your nominated bank account.
- Tax deducted on the 8% interest — the lender deducts basic-rate income tax (currently 20%) at source from the 8% interest only, not from the refund itself.
How redress is calculated. For the 8% interest specifically, see The 8% statutory interest explained.
Credit-file updates
A successful complaint normally produces credit-file corrections, with adverse markers linked to the unaffordable lending removed. The mechanics:
- The lender notifies each of the three main credit reference agencies (Experian, Equifax, TransUnion) of the corrections.
- The agencies update your file, typically within 4-6 weeks of receiving the notification.
- Default markers and arrears records linked to the upheld lending are removed.
- The account history may be relabelled to reflect the corrected position.
- Where the entire lending is found unaffordable, the account record may be removed entirely.
Will a claim repair my credit file?.
If you still owe money
What if you still owe the lender money?.
If the lender is in administration
What if the lender has gone into administration?.
Tax
Is unaffordable lending redress taxable?.
Are there any knock-on effects?
Things that may need consideration after a successful claim:
- Other credit applications — the credit-file improvement should help, not hurt, future applications.
- Means-tested benefits — a large lump-sum refund may need to be declared and could affect savings-related benefit assessments. This is a matter for the relevant benefit rules; debt and welfare advisers can help.
- IVA or bankruptcy — if you are in an IVA or have been bankrupt, the redress may be payable to the trustee or supervisor rather than to you directly. This depends on the timing of the lending and the IVA/bankruptcy.
- Self-assessment — if you complete a self-assessment tax return, the 8% interest needs to be reported.
Related guides
- How redress is calculated
- The 8% statutory interest explained
- What if you still owe the lender money?
- Will a claim repair my credit file?
- Is unaffordable lending redress taxable?
Check If You Could Be Owed Compensation
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