If you have taken a payday loan out, you may be due compensation. You will also be aware that a payday loan is a short term form of credit which is designed to tide you over until you receive your next pay cheque.

Despite the bad reputation payday loans get in the press, the majority of payday lenders do practice lending ethically against the standards and rules set by the Financial Conduct Authority (FCA). This means that it is the lender has a responsibility to check certain things and provide you with certain information before they go about approving your loan and giving the money.


If a payday lender does not follow the rules, you can make a complaint – not many people are aware of this, but you may be able to claim compensation back. IF the lending company provides a response which you are not happy with or they do not get back to you within the set period of eight weeks, you can take your claim to the Financial Ombudsman Service.

In this guide, we tell you all about what sort of things could have happened to you that could qualify you for a payday loan refund.

What can you complain about?

There are actually a number of things which you can complain about. You can make a complaint if:

Your lender did not make it clear how much the loan would cost you in total with the interest and extra fees attached. When you are approved and when you are applying, you should be provided with an example price for each £100 borrowed.

You were not provided with accurate or the full information required by the FCA about how and when you are to pay back your loan. When claiming, explain what is missing or inaccurate.

The lender failed to check your finances or personal circumstances to see if you were actually ever in a position to pay back the loan. The things they should have taken into account include age, mental health, employment status, income, expenditure, proof of identity and financial history.

The lender did not tell you what you can do if you do want to make a complaint.

It was not clearly set out by the lender about how continuous payment authority (CPA) works and that you do have a right to cancel it. CPA is where you will agree to pay back the loan via a series of deductions from your debit or credit card.

The lender did not let you know in advance that they were going to take money from the account using CPA.

The lender never told you that there would be charges for things like late repayments. As of July 1st, all payday loans which are advertised must include this warning.

The lender did not let you know about the risks of extending a loan before you did it. In some cases, lenders may pressure their customers to extend their loans – if this has happened to you, provide information about how much you borrowed in total and how many times you did this.

How to complain

If one of the above does apply to you, then you will be eligible for making a complaint and gaining the compensation you deserve. Gather together all the relevant evidence and write a letter or email directly to the lending company that you dealt with. Make sure you clearly state what it is you are complaining about and providing evidence that applies to that problem.


Rest assured that if you are unhappy with the service a payday loan provider has given you, you can complain to the Financial Ombudsman, who can provide support and guidance as to what you need to do next.

The lending company has up to eight weeks to reply to you, a deadline set for payday lenders. If they do not reply in this time or if you are unhappy with what they are offering you, you can take it to the Financial Ombudsman who will make a decision as to what you are due. They will look at both sides and get back to you with their verdict. Most lending companies want to avoid this stage so may just offer you what you want in the initial stage.

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