Payday loan complaints soar by 130% – here’s how to claim compensation
QuickQuid was the most complained about payday lender with 10,409 new cases in 2018
COMPLAINTS about payday lenders have soared by a "startling" 130 per cent with some lenders' behaviour being slammed as "unacceptable".
The Financial Ombudsman Service says it received nearly 40,000 new complaints about short-term lenders in 2018 - up from 17,000 the previous year.
That's a whopping 130 per cent increase and the fifth largest hike in complaints by financial product.
QuickQuid owner Casheuronet was the most complained about payday lender with 10,409 new cases in 2018 of which 63 per cent were upheld in favour of the consumer.
It was followed by WDFC, the owner of Wonga, with 6,876 complaints of which an even higher 68 per cent were upheld against the firm.
Next up was Lending Stream owner Gain Credit with 5,414 complaints (61 per cent upheld) and Instant Cash Loans, which trades as The Money Shop, with 3,241 complaints (43 per cent upheld).
How to claim a refund from payday lenders
YOU can claim compensation from a payday lender if the loan was unaffordable, even if you've finished paying it off.
If you think you are owed compensation, then then you should follow these steps from DebtCamel on how to claim.
1. Check if you were mis-sold the loan
Before a lender gives you a loan, they have to check whether you are able to pay it back.
For a payday loan to be affordable, you had to be able to pay it back the following month as well as pay your other bills and debts.
The loan was unaffordable if:
- you often rolled loans or borrowed again soon after repaying a loan;
- your loans from a lender were increasing in size;
- some repayments were late; or
- the loan was a significant part of your income.
Ask the lender for a copy of your loan details, like when you took it out and how much interest you paid.
Compare it to your bank statements from the time you took it out and work out if you would have been able to pay back the loan after you paid your bills.
2. Make a complaint
There are websites that will help you submit your complaint to the lender but beware that if you're successful they will take a cut of your compensation.
DebtHacker.co.uk is a completely free tool that will help you with the same process.
If you'd prefer to do it yourself then you should write a letter or email citing citing "unaffordable loans" and ask for a full refund of the interest and charges you paid, plus the 8 per cent Ombudsman interest on top.
Also ask for the loan to be removed from your credit record.
You can find letter templates in , and - although some lenders will have their own reclaim tools set-up.
You can complain even if the lender has gone into administration.
3. Go to the Ombudsman
If you haven't heard anything back from them after eight weeks then you should take the issue to the .
You should also contact them if your complaint is rejected, the refund is too low or they refuse to consider loans that are over six years old and have been sold to a debt collector.
But be aware that you can't usually complain to the Ombudsman where the firm has gone into administration.
These were followed by Curo Transatlantic Limited, which traded as Wage Day Advance and Juo Loans, with 2,797 complaints (49 per cent upheld).
Wonga, Wage Day Advance and Juo Loans have all gone bust in recent months after struggling to process hundreds of thousands of compensation claims from borrowers who accused them of irresponsibly lending, leaving vulnerable Brits forking out for sky-high interest rates.
Wonga stopped lending in August 2018 and now administrators say customers now have until midnight on September 30 2019 to apply for a payout.
Meanwhile borrowers of WageDayAdvance and Juo Loans - which went bust this February - have been told that they have until midnight on August 31 to claim.
We spoke to one dad-of-two who got a £3,750 refund for a £600 payday loan from Wonga that he couldn’t afford.
See the box above for help reclaiming your payday loan.
Complaints rocket to five-year high
Overall, complaints made to the Financial Ombudsman Service have rocketed to a five-year high, with more than 388,000 new complaints being made in the year from April 2018 to April 2019.
That's a 14 per cent increase on the previous year.
The product with the largest increase in complaints was instalment loans (360 per cent rise), followed by investment-based crowd-funding (200 per cent rise), small self-administered schemes (181 per cent rise), and guarantor loans (130 per cent rise).
We revealed earlier this week that NatWest is the worst bank for helping fraud customers, according to the Ombudsman's data.
Caroline Wayman, chief ombudsman and chief executive of the Financial Ombudsman Service, says it's not good enough from financial providers.
She said: “Too often we see that the interests of consumers are not hard-wired into financial services.
"This marks a five-year high in the number of complaints that consumers have brought to us, and the behaviour we’ve seen from some businesses is simply not good enough.
“While we do see examples of businesses responding well to customer concerns, we also see many firms who don’t. Our message to businesses is that practices must improve. ”
But a spokesperson for the Consumer Finance Association - the trade body that represents the largest share of short-term lenders - says many of the claims made to the Ombudsman don't have a leg to stand on.
They said: “It is important to make clear that this sector has changed massively, and most of these complaints date back a number of years.
“These figures show a deeply disappointing increase, driven by a flood from claims management companies and we continue to see many a complaint that has no foundation."
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They add: “We also have concerns as to how the Financial Ombudsman Service calculates some of the figures included in its annual review.
"Inaccuracies include a significant proportion of complaints being reported by the FOS as upheld, when the opposite was true. Complaints which are withdrawn are being counted as new complaints, but no account is taken of them in the upheld rate.”
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