If you have ever taken out a payday loan, you may be due for compensation. The number of complaints surrounding the conduct of payday loans companies rose by 178% in 2017, as revealed by the Financial Ombudsman and now there is a demand in customers looking to claim from payday loans direct lenders, for legacy loans that were taken without sufficient checks before funding.
Can you get a refund on a payday loan? How long would it take to get to me? How do I go about claiming? These are all frequently asked questions which need to be cleared up. This guide aims to explain all the steps that you may need to take in order to apply for a refund on a payday loan from any of the major lending sites.
The steps are as follows:
- See if you are eligible
- Compile information about the loan you took out
- Build your case about lack of affordability checks
- Construct your letter to the lender
- Await a response from the lender within 8 weeks
- Refer your claim to the Financial Ombudsman Service
Step 1: Check if you are eligible to make a claim
In order to make a claim against your payday lender(s), you will need to be able to show that you believe it was unfair lending and they the loans were not repaid due to difficulty.
The FCA states that:
“The lender must make a creditworthiness assessment and the assessment should include the lender taking reasonable steps to assess the customer’s ability to meet repayments in a sustainable manner without the customer incurring financial difficulties or experiencing significant adverse consequences.”
The regulations set by the FCA state that:
The payday loan you took out had to be affordable. Therefore, you should have been able to meet the repayments in the following months as well as being able to afford things like your rent or mortgage, your bills, food, transport and any other standard financial obligations.
However, if you found yourself having to borrow again, you were making late repayments or could not make other payments through no fault of your own, then the payday lender was lending irresponsibly. You should not have been accepted for a payday loan and you could well be entitled to compensation.
Step 2: Gather together all the facts on how many loans you have taken out and when it was that you took them out.
If you believe that you have been treated unfairly by a payday loan lender or multiple lenders, you should gather a list of the details of your loan together. You should be able to find this information from your online accounts with the lending company, your credit report or your general bank statement.
Step 3: Build your case for lacking affordability
Building a strong case as to why your payday loan was unfairly unaffordable is of great importance to receiving your compensation. If you can build this case, then the lender should settle the problem with you to avoid going to the Financial Ombudsman.
Cutting out that step will save you time and a lot of stress, so it is well worth putting the effort into building a convincing case with evidence to back it up.
Once you have your list of all the payday loans you have taken out, you now need to detail your own income and expenses. Make a list of the amount you have earned each month or week, depending. Next, create a list which details your expenses in including things like your rent, council tax, bills, supermarket shops, phone bill, insurance, transport costs, clothing, child care, and so on.
Step 4: Construct your letter or email to each lender
Once you have gathered all the appropriate information, you can submit your claim or claims to the lender or lenders. Write them a letter or email, whichever you prefer, and send it to each lender saying that you wish to make a complaint regarding “unaffordable loans”.
Ask for a refund of all the interest and extra charges you agreed to pay. You can also ask for the loan to be deleted from your credit record if it is not still on there. You may want to do this as it could be harming your credit score in the background, resulting in you potentially struggling to get credit in the future.
Step 5: Wait up to 8 weeks for a response
Annoyingly, you could be waiting up to 8 weeks for a response, but it should not take longer than this because this is the deadline set for payday lenders.
Review their offer, it may not be exactly what you want. They may not be offering you the full amount of interest that you paid initially. If you are not happy with the offer, it is time for step 6.
Step 6: Refer your claim to the Financial Ombudsman
If the settlement which was offered to you directly by the payday lender was not satisfactory, then you should refer your claim to the Financial Ombudsman. This will not cost you a penny.
It is important to note that if you have a more than one lender involved, you should write a separate letter for each one.
They will investigate your claim and look at the evidence provided by both parties. They may contact you for more information if needed.
If they agree with you, you should expect a full refund of the fees and interest. So, if you are entitled, it may be well worth making a claim.