1. Confirm the reason for complaint is a valid reason (see below)
  2. Download and complete this template 
  3. Make a complaint to the Financial Ombudsman Service – call 0300 1239 123 or 0800 023 4567

Looking to complain about payday lenders?

The number of complaints being made by consumers regarding payday lenders has increased dramatically in the last year alone, overtaking the number of PPI compensation claims being made annually, a scandal largely considered to be one of the UK’s biggest. There have been different factors that have contributed to the rise in complaints against payday lenders, such as the increase in media attention regarding the takeover by the Financial Conduct Authority, and their widely implemented crackdown on the lending practices and behaviour of companies in the short-term loan industry, leading customers to be much more keenly aware of their consumer rights, as well as the Financial Ombudsman increase time restraints in relation to the time frame within which customers can make a complaint about a financial product in exceptional circumstances. Historically, customers have complained because lenders have funded payday loans for bad credit, and they have been unable to meet the repayments. Lenders may have not carried out sufficient checks or pushed the customer into taking a loan and then hoping to charge late fees for defaulting. Regardless of the reason, you have found yourself in a situation where you feel it is appropriate to make a case against a payday loan company you have dealt with. Perhaps you feel that they have not dealt with your complaint fairly, or are unsatisfied with the agreement you have come to with your payday lender about a dispute. If you do have a complaint about a payday loan company, it is possible to complain, as well as even take it to the Financial Ombudsman Service if you so wish. But how do you go about this? We explain in this step-by-step guide on how to complain if you are deeply unsatisfied with the service you have been provided.

What you can complain about

As stated by Citizens Advice, payday loan lenders should be abiding by a Good Practice Customer Charter. Things you can make a complaint about include but are not limited to the following:
  • The payday lender didn’t inform you as to what you need to do if you have a complaint
  • The lender didn’t provide clarity on what a continuous payment authority is to you, how it works, or how you can cancel it
  • The lender didn’t check the affordability of the loan to you (i.e. your financial or personal circumstances)
  • If you were made unaware about free debt counselling organisations when you informed your lender you were having difficulty paying te loan back
  • You weren’t informed of the risks that are involved when extending the loan
  • When you stated you had difficulties paying the loan back, the lender did not deal with you in a sympathetic way
  • You felt you were pressured into extending the loan. In this scenario, explain how much you paid every time this happened plus how many times in total
  • The cost of extending the loan was not made clear to you
  • When contacting the payday loan lender about your financial issues, they did not offer to freeze charges and interests even if a reasonable repayment plan was put forward by you
  • The information you were given about how and when you should pay back the payday loan was inaccurate, or parts of the information were missing
  • The lender didn’t clearly state how much it would cost you including fees and charges when it came to making repayments on the loan. For example, giving you an example of how much the total would be per £100 borrowed.

Make sure you all your evidence ready

If you are unhappy with your payday loan lender and have an issue that is unresolved with them, you have the option of making the complaint directly to the company in question. If you take this route, the financial provider will have a time frame of eight weeks within which they should deal with your complaint. When filing this complaint, you should make sure that you clearly stated ‘Complaint’ at the top of your letter or email header, in order to make sure there is complete clarity as to what the letter is regarding. If you have spoken to people at the customer service department previous to reporting your complaint, make sure you have their names in the letters, as well as the exact dates that you spoke to the people in question. You should also be clear in the letter how you would like the situation to be resolved.

Unresolved complaint?

In order to comply with the regulator, the Financial Conduct Authority, all financial providers need to have in place internal procedures for dealing with your complaint, making sure that their staff know exactly how these rules work and who can inform you clearly what your rights are. If the payday loan provider is unable to give you a satisfactory response by the end of the business day regarding the complaint you have made (once they have receipt of it) then the next step is that they provide you with a written acknowledgement that shows they are taking into consideration your complaint.  The payday loan lender should also make sure they keep you regularly informed about what is happening when it comes to dealing with your complaint. As previously stated, this should be dealt with within eight weeks in total. If a final verdict has not been given, then at the very least the provider should give you a clear explanation as to why this hasn’t occurred.

Complaining to the Financial Ombudsman Service

When it comes to making a complaint about a payday loans provider, you also have the option to refer the complaint directly to the Financial Ombudsman Service. This is usually the point in the complaints process where you have already exhausted other channels (such as the company’s own internal complaints procedure) in order to come to a satisfactory conclusion, but have as far been unable to do so. This problem should be dealt within eight weeks.

Daniel is a loans expert based in London and has been working in the payday loans industry since 2010.