Reclaim payday loans for free

Get £100s or £1,000s back for being mis-sold without using a claims firm

payday loan refunds

Did you get a payday loan that you couldn't afford to repay as the lender didn't check your finances properly or kept trying to sell you it again and again? If so, you may be able to reclaim £100s or even £1,000s. Claims management companies have been pushing this reclaim industry, but you DON'T need to pay to claim. There's been a surge in claims and this short guide shows you how to reclaim for FREE.

Urgent: Lots of payday loan firms have gone bust, so get your skates on if you've a claim, in case your firm disappears too. If that happens, you may get little back, hence the rush. Remember, the deadline to complain about a Wonga loan is 30 September.

In this guide

What is a payday loan and why are they flawed?

Payday loans are designed to be short-term loans of £100 to £1,000 that – as their name suggests – tide you over to the next payday, at which point you have to pay it back, plus the interest accrued.

They're often far too easy to get and many borrowers have been stung by tricks used by payday loan firms, as well as their lending decisions, and have ended up struggling to pay it off, running up hideous amounts of interest.

Following the demise of the UK's largest payday loan firm, Wonga – partly down to the increase in people reclaiming for mis-sold loans – MSE founder Martin Lewis said: 

The payday loan industry was built on the back of marketing, not need. They sold people the concept of a need to create a demand, then pushed products. Payday loans are for most a flawed concept. How many in dire need this payday would see such an improvement within a month that they not only not need to borrow again, but could repay last month's loan plus the huge interest?

It made it too easy – some even told anecdotes of drunk people, coming home, watching gambling on TV, seeing Wonga's ads then pushing the button for instant cash at 5,000% APR to bet with. And as many couldn't afford to repay, payday lenders made people sign up to immoral agreements that meant cash could be taken directly from their bank accounts without request.

How do I check if I was mis-sold? 

Before lending to you, payday loan firms – as part of the good practice customer charter and rules imposed by the Financial Conduct Authority – should check your finances to make sure you can afford it and also give you all the key information. If a payday lender hasn't followed these rules then you have grounds for a complaint.  

Quite simply, the main reason you may have been mis-sold a payday loan is because you should never have been lent the money in the first place – as you could never have afforded to pay it back. 

For example, if you earn £400 a month and you're given a payday loan for more than this, it should be clear to the payday lender that you wouldn't easily be able to pay back the loan – in fact you would probably get into a situation where you needed to borrow more money to try to pay it back. 

The Financial Ombudsman Service (FOS) said complaints about payday lenders leapt 130% in 2018/19. Unhappy customers lodged 39,715 claims with the FOS in the 12 months to the end of March 2019, compared with 17,256 the year before.

The total number of payday loan reclaims is likely to be much higher as legitimate claims should be settled by the lender, the first port of call, provided it's not gone bust. You should only go on to the FOS if you haven't reached an agreement with the lender.

The FOS found in favour of more than 21,000 claimants in 2018/19, upholding 53% of cases and criticising the behaviour of those lenders as "unacceptable".

As payouts can be worth £1,000s, it's worth checking if you were mis-sold. 

The mis-selling checklist

You can claim a refund from existing loans and loans you've already paid off, as long as you raise the case within six years of taking out the loan (if it's longer than six years, contact the FOS as in some circumstances, you may still be able to claim). Here are the main mis-selling categories. If you fit one or more of these, you're likely to have a case:

    • If the lender did not make clear to you how much it would cost you in total to repay the loan. You should have been given an example of the price for each £100 borrowed, including fees and charges.

    • You weren't given full or accurate information about how and when to pay back your loan.

    • The lender did not sufficiently check your finances or personal situation to make sure you'd be in a position to pay back the loan. Here you can take such factors into account as your age, mental health, employment status, income, expenditure, proof of identity or financial history.

    • The lender didn't tell you that a payday loan should not be used for long-term borrowing or if you are in financial difficulty.

    • You weren't told by the lender what to do if you have a complaint.

    • The lender didn't make clear to you how continuous payment authority (CPA) works – where you agree to pay off the loan by making a series of deductions from your credit or debit card – and your right to cancel it.

    • The CPA didn't tell you in advance that it was going to take money from your account.

    • The lender didn't include a risk warning about late repayment in its online advert, or in an advert that was sent to you by email or text message. 

    If you've had problems repaying the loan, you can complain if your payday loan lender:

    • Didn't deal with you "sympathetically and positively".

    • Didn't offer to freeze interest and charges if you were unable to make payments under a reasonable repayment plan.

    • Didn't tell you about free and independent debt-counselling organisations.

    • Pressurised you to extend the loan.

    • Didn't tell you about the risks of extending the loan.

    • Didn't make clear exactly how much it would cost to extend the loan.

    • Didn't check your personal finances and general situation to see if you were able to pay back an extended loan.

Can I still get money back if my payday lender has gone bust?

You'll need to make a claim with the firm's administrator, but the short answer is that it all depends on how much money is leftover and how many creditors this has to be shared between.

Unfortunately, customers of payday lenders are at the back of the queue of people owed, being counted as 'unsecured creditors'. This means they're unlikely to see all the money they're due and could be waiting months.

Even those people who get their claims in just before a company goes bust may not get any more than those who filed theirs afterwards – it all depends on the administrator and the circumstances. 

Payday lenders aren't covered by the Financial Services Compensation Scheme, the consumers' safety net for when most finance firms fail. So when they go bust, the size of the payouts is down to how much money the administrators can squeeze out of the business and how many creditors are lining up.  

In terms of speed, you won't necessarily be better off using a claims management company. Wonga's administrator Grant Thornton says it won't be dealing with such claimants any faster than others. And as we always say, using a claims firm will cost you in fees which can run into £100s.

If your payday lender goes bust and you're paying back a loan, you're likely to have to continue paying until the administrator tells you otherwise. In some cases, what you're owed for being mis-sold could be wiped from the ongoing loan. You could be due the interest and charges and interest on all of that, and often this caboodle can work out bigger than the original loan itself.

So get in fast if you've been mis-sold, in case your payday lender goes bust – or you could lose out big time.

There's a special compensation route for Wonga customers. Sadly, you won't get much back

Urgent. The deadline to make a Wonga claim is Monday 30 September.

Wonga customers must apply for compensation via a website set up by Grant Thornton. But sadly you'll only get a few pennies in the pound of any money you're owed, eg, if you were owed £100, you'll be lucky to get more than a fiver back.

You only need to put in your identification details and, provided these match Wonga's records, you'll get a receipt that you've lodged a claim. 

You don't actually have to explain how you were mis-sold. Instead, Grant Thornton will assess if you are owed money by examining your Wonga loan history. Grant Thornton insists it is following guidelines set out by the Financial Ombudsman Service when making its assessment.

If unsuccessful, you can escalate your complaint within Grant Thornton's complaints department but you can't complain to the ombudsman, as payday loan firms that are in administration fall outside its remit.

There's no confirmed dates for payouts, but the latest indications are they're not likely until October 2019 at the earliest – over a year since Wonga went bust.

For more details on claiming via Grant Thornton's online form, see how the Wonga claims process will work.

  • Yes, you do. All new claims should go through it. While claims against other payday lenders can be made through the MSE Resolver tool, Wonga customers should go via the administrator's online form. Grant Thornton will be emailing customers directing them to the form and will notify them before it's due to close.

  • Grant Thornton has developed a tool to assess your claim automatically, speeding up the process. Your claim will be based on several criteria, including: 

    • The size of your loan in relation to your reported income.
    • How long you held the loan and how many loans you have had, to see if you repeatedly borrowed without a significant break.
    • Other indicators of affordability, eg, being in arrears.

    Grant Thornton says it will follow the way the Financial Ombudsman Service (FOS) treats payday loan claims as closely as it can, while balancing its duty as administrator to return as much money to other creditors as possible. 

    If you disagree with the outcome, your claim will only be put forward for a manual assessment if you can come up with new evidence about being mis-sold unaffordable finance.

  • If you've already made a claim and have been told it's been received, you do not need to use the new site.

    This includes some 24,000 claims made by 31 August 2018, when Grant Thornton took over as administrator. It also includes the 7,000 or so claimants who had gone to the FOS, as these have been passed on to the administrator.

I think I was mis-sold – how much can I get?

It's all about being put back to where you should have been if you'd been treated fairly and responsibly in the first place and we've seen reclaims ranging from £100s to £1000s so far.

You should get all of the interest, fees and charges back, which will usually dwarf the original loan. You're also due 8% interest on the interest, fees and charges each year, dating back to when you first started paying them. For example, if your refund was £1,000 from one loan exactly four years ago, you'd also have 8% of £1,000 (£80) added for each of the four years, so 4 x £80 = £320. 

As you should first try to get your money back from the payday loan lender via our free tool below, make sure you know what you're due, so you're not short-changed. If your claim is rejected, or you're not satisfied with the final offer from the lender, it's simple to escalate it to the Financial Ombudsman Service (FOS) – see below. 

In most cases, you won't be refunded for the loan itself, though in some extreme circumstances, the FOS told us you could get the remainder of the loan written off.

  • As well as a refund, you can request that any poor payment records on loans deemed to be 'unaffordable' are removed from your credit file. It's not done automatically, but if you use our tool, Resolver – which we worked with to create it – will prompt you to request that bad marks are removed.

    As the lender itself has to remove the marks (which means you may not be able to do this if your lender has gone bust), it's a good idea to check each lender actually does this by checking your credit report via MSE's free Credit Club. Bear in mind that it can take a month for credit files to be revised.


Some inspiration... 'I got over £5,000 back' 

MoneySaver Woody53 wrote in our forum that after seeing the news regarding payday loan mis-selling, they contacted five companies and have so far received over £5,000 back:

From early 2011 until mid-2014 I was caught in the payday loan trap. I borrowed the money and paid every penny back, which I would estimate to be £15,000 over the years. I saw all the news regarding payday loan companies and irresponsible lending, so I decided to try to get a few quid back myself.

So far I have been in contact with five of the companies that lent me multiple loans at the same time with many rollovers too [paying a fee to extend the loan's due date]. I've received four apologies and offers totalling over £5,000 and the other complaint is now with the ombudsman. From the initial email sent I had the money back within eight weeks.

After using MSE's free payday loan reclaim tool, MoneySaver Nat emailed in to say:

QuickQuid just kept allowing me to increase the amounts I borrowed, even though I started to accrue a string of debts with other payday lenders. It didn't seem to matter that I had these other financial commitments - they were happy to renew and increase the amount each time. It became a vicious cycle.

I used the Resolver tool. They didn't need to see any evidence, just my written account of how I felt they should not have lent to me in my financial situation and how it lead to a very anxious and stressful situation. Almost two months later, I received a payout of £4,172!

  • So following the offer of £250 from QuickQuid I took my complaint to the Financial Ombudsman Service (FOS). They were absolutely fantastic and upheld my complaint in full and told QuickQuid to refund all interest and charges and a small amount of additional interest. Total refund of £2,580.

    Forumite Rossim1985

    I just got £250 back and a removal of the loan from my credit history. To be honest, I could probably have taken it onwards with the FOS and got a bit more, but I'm happy enough with what they've offered.

    Forumite FinallyGettingFree

How to reclaim for free – but be quick

If you think you've been mis-sold a payday loan, hurry up with making a claim by using our free online reclaim tool via complaints site Resolver. The risk is that if your lender goes bust – as many have – you may get little back, so get in quick in case that happens. 

If you complain to the payday lender via Resolver, it'll help escalate your case too. It will prompt you to contact the Financial Ombudsman Service (FOS) after eight weeks, so if your complaint's rejected, or you don't hear back or aren't happy with the final offer, the FOS will look at your case (though you must escalate it within six months of the rejection/final offer). 

Since its launch, tens of thousands of MoneySavers have used our free tool and are reporting back individual payouts averaging £348 from 20 payday lenders. But some refunds have been 10 times bigger. 

To inspire you, Paul from Lincoln contacted us in June 2019 with his success in reclaiming mis-sold loans that went back nine years: 

Thanks for use of Resolver. I was paid back £3,800 from QuickQuid/Pounds to Pocket. All sorted within 6 weeks for loans from 2010 to 2013. Only did it after reading your item. Many thanks.

Important: If you're making a claim against Wonga, use the dedicated online form set up by its administrator Grant Thornton. For other lenders, use the Resolver tool. 

You don't need to use a claims management firm

Claims management firms may advertise as 'no win, no fee', but if you do secure a payout, some charge a huge fee – between 24% and 36% including VAT. Yet it's simple to reclaim yourself, for free. 

Shockingly, two-thirds of people who went as far as the ombudsman to get compensation in the year to 31 March 2019 for mis-sold payday loans faced losing a hefty portion of their payout in fees to claims management firms.

Among nearly 40,000 claimants who turned to the ombudsman in 2018/19 having first asked for a refund from their payday lenders, nearly 27,000 stood to miss out, often on £100s, when they could have claimed easily for free using our tool or template letter.

Don't want to use Resolver? Use our free template letter to do it yourself

We know some people would prefer not to use the online tool, so if you prefer you can submit your complaint directly to the payday lender, using our free template letter to help.

  • Speak to the payday lender or check its website for the address of the complaints department. Generally these things are best done in writing, but if that's too difficult, don't worry about calling. Just ask it's noted down as a formal complaint, and also ask for written confirmation.

    Don't feel you have to be formal. Just explain the point clearly, concisely and honestly as if you were explaining to a friend why you've been wronged. To help, we've put together a template letter to start you off – download it and fill in the blanks. (Use it to help start you off, but the more you write in your own words, the better.)

    Template letter: Payday loan reclaim.

    Important: Keep a copy of the template letter – it'll be helpful if you end up needing to go to the ombudsman.

    But there's something crucial you need to understand. At this stage, reclaiming's like a game of 'who blinks first?' Your payday lender may say "no". If so, don't worry. You can take your case to the FREE ombudsman (see below). 

  • If you don't hear back from the lender after eight weeks or your complaint's rejected or you're not happy with the response, you should escalate your complaint to the free, independent Financial Ombudsman Service. This is the official, impartial body for settling disputes between individuals and financial companies.

    You need to fill in the Ombudsman complaint form

    As with the first letter to the payday lender, which you could always copy and paste, don't feel you have to be formal. Explain the point clearly, concisely and honestly, in your own words, just as if you were explaining the situation to a friend.

    For help to fill it out: Complaint form help.

    It's simple to fill in, though take care. If you need help filling this in, you can call the FOS on 0300 123 9123 or 0800 023 4567, and it'll guide you through the claim, or use our step-by-step guide above. It's written in Microsoft Word so you can easily cut and paste sections or print it and have it next to you as you're filling in the ombudsman's form.

    You can send it back by post or fill it in online. Attach any paperwork to back up your case.

    The ombudsman will send you a confirmation letter to say it'll look into your case and get back to you if it needs any more information.

    The ombudsman will decide whether the circumstances under which the payday loan was sold were unfair, then decide what redress is required. In most successful mis-selling cases, this means a refund.