Complaining about an unaffordable payday loan is free, needs no solicitor and can succeed even after a lender says no. But not every complaint wins, and the differences matter.
Need to know
- You can complain about loans you are still repaying, have already repaid, defaulted on or are paying through an arrangement; on-time payments do not rule out a claim.
- A lender’s rejection is not the end: after a rejection, or eight weeks without a final response, you can refer the case to the Financial Ombudsman Service.
- There is no charge to complain, and successful cases bring refunds of interest and charges, with compensation possible in some circumstances.
- Complaints fail when the lender’s checks were proportionate at the time, so outcomes depend heavily on the evidence of what the lender knew when it lent.
Payday loan complaints, and affordability complaints in particular, are one of the main ways borrowers can challenge loans that should never have been made. The rules require short-term lenders to make the total cost of repaying clear, check your finances and personal situation, warn that these loans are not for long-term borrowing or financial difficulty, and explain how to complain. Around that process a set of beliefs has grown up: that only repaid loans count, that a lender’s rejection ends the matter, and that professional help is needed. This article tests those beliefs against how the rules and the Financial Ombudsman Service, the independent body that settles disputes between consumers and financial firms, actually work.
Myth: Only People Who Repaid Can Complain
The belief seems to be that a complaint only works if the loan is a finished, paid-off disaster. The rules are broader than that. You can complain about a loan you are still repaying, one you have already repaid in full, one that has defaulted, meaning payments stopped and the account is recorded as in breach, or one being paid through a debt arrangement.
Making every payment on time does not defeat a complaint either. Borrowers can win even when they paid punctually throughout, because a loan is not genuinely affordable if repaying it left you short and relying on other credit to get by.
What does weaken a complaint is if the loan was affordable when it was made and only caused problems later, after something unforeseen such as redundancy. If the problem is that you cannot keep up right now, complaining and seeking help can run in parallel; our guide to struggling to repay a payday loan covers options including asking the lender to freeze interest.
Myth: Complaints Go Nowhere if the Lender Says No
Lenders do reject complaints, including ones that later succeed, so a rejection is a step in the process rather than the end of it.
The sequence is fixed. You have to raise the complaint with the lender first; once it has landed, five days is the most the lender can take to confirm it has been received. It then has up to eight weeks to issue a final response, its written decision on the case. A rejection, or eight weeks going by without a decision, opens the door to the ombudsman, and the regulator has proposed that firms must tell customers in writing that this option exists.
Cases do get overturned. In one published case, a borrower with 50 loans from a single lender was told by that lender that everything had been offered responsibly. The ombudsman reviewed the borrowing pattern, took the view the lender should have recognised the problem by around the tenth loan, and the lender then agreed to refund the interest and charges on every loan after that point. Our guide to complaining about a payday loan sets out the deadlines and the referral process in detail.
Myth: You Need a Solicitor or a Claims Firm
The ombudsman process is designed to be run by the person complaining. You fill in the ombudsman’s complaint form, which asks questions as you go, and the service may then ask you and the lender for more information before deciding using the evidence from both sides and any relevant third parties. There is no courtroom; the ombudsman reviews the written evidence and reaches a decision.
Template letters are widely available to help you structure the first complaint to the lender. Email is a practical way to send it: it is free, instant and leaves you a dated copy to show the ombudsman later.
One detail matters if the debt has been passed on: send the complaint to the original lender, not the debt collector.
Helpful step
Keep every email and letter about the complaint, including the lender’s responses. The ombudsman decides on the written evidence, and a dated paper trail is what it works from.
Myth: It Costs Money to Take a Case to the Ombudsman
Complaining to the lender costs nothing beyond your own time. There is no charge to bring a complaint to the ombudsman either, and the Financial Conduct Authority, the regulator that writes the rules lenders must follow, has framed its complaint-handling reforms around the principle that complaining should not leave consumers out of pocket.
Redress runs the other way. In one published case, the ombudsman told a bank to pay a customer £350 in compensation after it repeatedly refused to stop payments leaving her account for a payday lender, because the refusals caused real distress at a moment when she needed support.
If a firm offers to win your refund for a share of the money, check the terms carefully before signing anything. You can run the complaint yourself from start to finish.
Myth: Too Much Time Has Passed to Complain
Old loans are not automatically out of reach. As set out above, you can complain about loans you have already repaid, and that includes loans taken out some years back.
The ombudsman does apply referral deadlines, and the FCA has proposed keeping those limits, judging that they provide a sufficient level of consumer protection. The deadlines depend on your circumstances rather than on a single fixed date, so do not assume a closed door before checking. Confirm the current time limits with the ombudsman directly, or through our complaints guide, before writing a case off as too old.
What Redress Actually Looks Like
Redress, meaning the remedy a successful complaint produces, takes specific forms.
Where a complaint is upheld and the loan has been fully repaid, the interest and charges are refunded in cash. Where a balance is still owed, the interest is removed so you repay only what you originally borrowed. In the 50-loan case, the lender wanted to deduct the outstanding balance of the borrower’s current loan from his refund, but the ombudsman pushed back, pointing out that he had other debts, including rent and council tax arrears, that would have had serious consequences if left unpaid.
Compensation for distress can be awarded separately, as the bank case shows. Where repayments were taken through a continuous payment authority, the arrangement that lets a lender take money straight from your bank account, complaints about those payments are also possible; our guide to continuous payment authorities explains how they work and how to stop them.
Complaining has a wider effect as well. The system exists partly to make sure lenders follow the rules in future, and every upheld complaint feeds into that.
What You Can Realistically Expect
Complaints also fail, and it helps to see why.
In one published case, a borrower took out a £150 loan while already in financial difficulty and complained that the lender should never have lent to him. The lender had run a credit check and asked about his income and living costs. He had declared £1,600 a month in income against roughly £700 of expenses, so the repayment was a small share of what he had coming in. The ombudsman concluded the checks were proportionate and the lender did not have to refund anything.
Two lessons follow. The ombudsman judges the lender against what it could reasonably have known at the time, so what you declared at application matters enormously. And the stronger complaints tend to show a pattern, such as repeat borrowing and balances that never shrank, measured against the checks lenders are supposed to make; our guide to affordability checks covers income, regular outgoings, borrowing and repayment history and wider credit use.
Set expectations on timing too: up to eight weeks at the lender, then however long the ombudsman’s investigation takes. And a win refunds interest and charges rather than wiping the slate clean, since the ombudsman normally expects the amount borrowed to be repaid.
If any of this matches your own borrowing, gather your loan emails and bank statements, write to the lender listing where you believe it broke the rules, and note the eight-week date as your cue to take the case further.
Your questions answered
Q: Do I have to repay the loan before I can complain?
A: No. You can complain while still repaying, after repaying in full, after a default or while paying through a debt arrangement. The lender’s decision on affordability does not depend on the loan being finished.
Q: How long does the lender have to respond to my complaint?
A: The lender has up to five days to confirm your complaint has arrived, and then up to eight weeks to send a final response. Once you have a rejection, or the deadline passes, the ombudsman is the next step.
Q: What do I get if my affordability complaint succeeds?
A: If the loan was repaid, the interest and charges are refunded in cash. If you still owe a balance, the interest is removed so you repay only the amount you originally borrowed.
Q: Can I complain about a loan from several years ago?
A: Often yes, since repaid loans can be complained about and the ombudsman’s referral deadlines depend on your circumstances. Check the current time limits before assuming the case is too old.
This guide is general information, not financial advice. Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk. We don’t arrange loans or work with lenders. Before borrowing, check the lender is authorised on the FCA register, and consider free debt advice from MoneyHelper, StepChange, National Debtline or Citizens Advice.