Payday loans

Your rights

Since 2014, companies providing payday loans have come under even closer scrutiny – investigations have shown that not all payday lenders treat their customers fairly. All companies providing credit must be authorised by the Financial Conduct Authority (FCA), and any that have broken their rules may have breached your rights. If you think that you’re dealing with a lender who isn’t authorised by the FCA, you should contact the FCA immediately.

Your rights demand that payday lenders clearly explain the details of the loan to you. If you feel that you were unable to make an informed decision regarding your payday loan, the lender may have acted unfairly. Likewise, payday lenders are required to make background checks to ensure that you can repay the loan. If you find yourself unable to pay off multiple payday loans, it is possible that a payday loan company may have lent irresponsibly. If you think you have been sold a loan you cannot afford to pay back, you should raise a complaint. Resolver can help you escalate your case to the Financial Ombudsman Service (FOS)!

In summary

• Lenders must send out a default notice 28 days before actually registering a default
• If you complain, your payday lender should acknowledge receipt promptly according to the rules
• If you aren't satisfied with the response, you can raise your case with the Financial Ombudsman Service (FOS) after eight weeks
• Each complaint is assessed individually by FOS and there is no common formula for complaints to be upheld
• In the first instance, lenders will always try to resolve your complaint before you need to refer it to the FOS

FOS has published guidance about what you can expect when you escalate your complaint.

Find out more

Changes made by the FCA have introduced a cap on the cost of payday loans. These high-cost short-term credit loans are now limited to a total cost cap of 100% of the amount borrowed. This includes interest, fees and charges, and means that you should never have to pay more in fees and interest that the amount you’ve borrowed.

How much interest can payday lenders charge?

Payday lenders are now limited to charging an interest rate of no more than 0.8% per day. This includes any fees, and is based on the amount you’ve borrowed. If you find that you’re paying more interest than this, Resolver can help you file a complaint.

If a lender finds that you are unable to pay back the loan by the due date, the lender can register a default against you. This will show up on your credit record, which may harm your chances of securing finance in the future. Lenders are obliged to send out a default notice 28 days before actually registering a default. Your rights say that you are entitled to complain if a lender registers a default in your name without prior notification.

If you find that you are unable to afford your repayments, you should contact your lender immediately to explain and request that they put your payments on hold. Most short-term lenders will allow you to suspend payments for 30 days so that you can set up a repayment plan or seek debt advice (for debt advice, please contact Stepchange - details are listed below).

In summary

• If you're struggling, you should always be allowed to work out a repayment plan.
• Aggressive or unfair debt enforcement isn't allowed.

Many lenders use continuous payment authorities (CPAs), which allow them to take repayments directly from your account. However, the FCA's rules state that lenders cannot keep trying to take payments from your account after two failed attempts (or after you’ve informed them that you are unable to pay). Resolver can help you get in contact with your lender and your bank – we advise you to do this as soon as possible, as it will stop lenders from taking further payments.

Your payday lender should have clearly informed you of any costs and fees involved in repayment of the loan. If you feel this was not done, you have the right to raise a complaint via Resolver’s free tool.

If you find that a payday lender has taken the incorrect amount from your account as a repayment, you should contact the lender via Resolver as soon as possible. Payday lenders should make the amount of money due in repayments clear to you. If you feel they haven’t, you have the right to complain.

A payday lender has taken money out of the wrong account

If, unusually, a payday lender has taken payment from the wrong account without your consent, you have a right to complain and to receive a full refund for the amount taken. Start a case using Resolver, including as much detail as possible.

What can I do about payday loan fraud?

In rare cases, fraudsters will use stolen information to take out payday loans. If you believe that a payday loan has been fraudulently taken out in your name, you must take immediate action. Use Resolver’s free tool to contact the lender and explain the situation.

There is incorrect information on my credit record

If you have taken out a payday loan and notice there is incorrect information on your credit record, you need to raise the issue and why you feel this is wrong. You can check your credit rating with a credit reference agency. Experian, Equifax and Call Credit are the three largest used by lenders. If the issue is not your fault, you should ask to have your credit record corrected. You can submit your request via Resolver for free.

Payday loans complaints tool