When you are struggling to find the money to last until your next payday or an emergency arises, and you need some extra funds quickly, it might seem like a good idea to get a payday loan. Payday loans are short-term finance solutions that are designed to bridge the gap until your next pay check, but they are not without their risks and issues.
Most payday loans charge high interest rates and fees in return for the convenience of having extra cash in your bank account within minutes of applying online.
As with any type of finance product, payday loans can come with their own issues, and you might find yourself wondering how to make a complaint about a payday lender. Direct payday lenders in the past have been criticised for irresponsible lending and offering unaffordable loans that cause borrowers to fall into a dangerous cycle of debt.
While more is being done now to protect borrowers from irresponsible lending; some payday loan providers might still be offering unrealistic deals and unaffordable loans that cause serious financial difficulties. This guide covers how to complain about a payday lender if you feel like you have been treated unfairly or offered a loan that wasn’t affordable to repay.
1. Collate any evidence you may have
When you feel like a payday loan lender has treated you unfairly, or you have an unresolved issue that they are not cooperating with, you can issue an official complaint to them. As all payday lenders must be regulated by the Financial Conduct Authority (FCA), they are required to deal with your complaint within eight weeks of submitting it.
To submit an official complaint, you should write an email or letter to the payday loan lender to fully explain the situation in detail. Head the letter as ‘complaint’ and make sure to include every detail you have on the matter, including any names of people you have spoken with and the dates you spoke with them.
Collate all the evidence you have to support your complaint, and make sure your letter or email is concise and clear and fully explains the issue you have had with their services. At the end of the letter or email, you should include details on how you expect the matter to be resolved, whether it is a full refund of the interest you have paid or a thorough investigation into why the issue arose to prevent it happening in future to you or other customers.
Payday loan lenders have a responsibility to only offer loans that are affordable in your financial situation. This means you should be able to afford the repayments, while also still being able to pay all your other financial obligations and outgoings. If you feel you were offered an unaffordable loan, then you can complain to the payday loan lender.
2. Getting a response that you are not satisfied with
The FCA requires every bank and financial provider to have a set of internal procedures in place to handle complaints efficiently and fairly. Every member of staff that deals with complaints for the payday loan lender should be fully aware of these rules and should inform you of the full complaints’ procedure. It is a requirement that their complaints procedure is clear and well defined, and available for all customers should they request it.
Once the payday loan lender has received your complaint, they should provide a prompt written acknowledgement if they cannot resolve the complaint to your satisfaction straight away. They should keep you fully informed of the progress of your complaint, and give you a final response within eight weeks, or an explanation of why a final response hasn’t been reached yet.
If you have ever rolled over a payday loan to the next month, then the payday loan lender should have performed a second affordability check to ensure you can still realistically afford the loan. If your payday loan lender didn’t do another affordability check, then you can make a complaint.
3. Make a complaint to the Financial Ombudsman
When you complain to a payday loan lender, they should also make you aware that you have the right to complain to the Financial Ombudsman Service (FOS). This route can be taken once you have done everything within the payday loan lenders internal complaints procedure, but still don’t have a satisfactory outcome.
If a lender hasn’t responded or resolved your issue within eight weeks, then you can complain to the FOS, and they should let you know when and how you can make a complaint. When you complain to the FOS, they will then act on your behalf to get your complaint resolved.
Every payday lender has a responsibility to respond fairly if a customer contacts them asking for help. If you asked for help from a lender and they did not provide it, then you can make a formal complaint.