Our use of cookies

Necessary cookies

We use necessary cookies to make our site work.

Analytics cookies

We'd also like to set analytics cookies to help us improve our website. Using this tool will set a cookie on your device to remember your preferences.

Read more about how we use cookies on our  cookies policy page

Policy version: 03

fos logo horizontal
Skip to content Open search Jump to navigation
Financial Ombudsman

Use Ctrl + / (or ⌘ + / on OSX) to open the search dialog from any page.

  • News and events
  • Decisions and case studies
    • Back
    • Decisions and case studies – overview
    • Ombudsman decisions
    • Case studies
  • Data and insight
    • Back
    • Data and insight – overview
    • Our insight
    • Quarterly complaints data
    • Half-yearly complaints data
    • Annual complaints data
  • FAQs
  • Contact us
  • Who we are
    • Back
    • Who we are - an overview
    • Our aims and values
      • Back
      • Our aims and values
      • Equality, diversity and inclusion
      • Diversity, inclusion and wellbeing report 2019/20
    • Our customer service
      • Back
      • Our customer service
    • How we make decisions
      • Back
      • How we make decisions
    • Governance and funding
      • Back
      • Governance and funding
      • Alternative Dispute Resolution
      • Annual reports and accounts
      • Board meeting minutes
      • Consultations
      • Strategic plans and budget
    • Our strategy
      • Back
      • Our strategy
    • Our work with other organisations
      • Back
      • Our work with other organisations
    • Meet our staff
      • Back
      • Meet our staff
      • Our board of directors
      • Our executive team
      • Our ombudsmen
    • Join us – careers at the ombudsman service
      • Back
      • Join us – careers at the ombudsman service
      • Join us as an apprentice
      • Join us as an investigator
      • Join us as an ombudsman manager
      • Life at the ombudsman service
      • Application process
  • For consumers
    • Back
    • For consumers – an overview
    • How to complain
      • Back
      • How to complain
    • What to expect
      • Back
      • What to expect
      • Who we can help
      • Time limits
      • How long it takes
      • Compensation
      • Compensation for non-financial loss
      • Compensation for financial loss
      • Tax on compensation
    • Who we’ve helped
      • Back
      • Who we’ve helped
    • Complaints we can help with
      • Back
      • Complaints we can help with
      • PPI
      • Fraud and scams
      • Covid-19 (coronavirus)
      • Banking and payments
      • Borrowing money
      • Insurance
      • Investments
      • Mortgages
      • Pensions and annuities
      • Other complaints
  • For businesses
    • Back
    • For businesses – an overview
    • Resolving a complaint
      • Back
      • Resolving a complaint
      • Before we get involved
      • Leaflet for consumers
      • How we handle complaints
      • Understanding compensation
      • Time limits for businesses
      • Case fees
    • Business support & engagement
      • Back
      • Business support & engagement
      • Technical desk
      • Voluntary jurisdiction
    • Complaints we deal with
      • Back
      • Complaints we deal with
      • PPI
      • Fraud and scams
      • Covid-19 (coronavirus)
      • Banking and payments
      • Insurance
      • Consumer credit
      • Mortgages
      • Investments
      • Pensions & annuities
      • Other complaints
  • Search
For consumers

Coronavirus update

Find out how our service is being impacted by Covid-19 (coronavirus), and what this means for your complaint.

Find out more
  1. Home /
  2. For consumers /
  3. Complaints we can help with /
  4. Credit and borrowing money /

Payday loans, and other short-term lending

Last updated: 28th January 2021
Print this page
Share this page
  • Send by email
  • Tweet about this
  • Share on LinkedIn
  • Share on Facebook

On this page

  1. What are payday loans?
  2. Types of complaints we see
  3. What we look at
  4. How to complain
  5. Putting things right
  6. Case study
  7. Resources
  8. Detailed advice for businesses

This page contains information about our general approach to complaints about payday loans and other short-term lending. If you’re looking for information specifically in relation to Covid-19, please look at our dedicated page that contains information for consumers about complaints in relation to Covid-19.

What are payday loans?

Payday loans are a type of borrowing known as "high-cost, short-term credit". You borrow between £50 and £1000 and pay back the loan with interest, in one payment on or shortly after your next payday. This kind of borrowing tends to be more expensive than some other types of credit.

There are other types of short-term lending, including:

  • instalment loans – payments are spread weekly or monthly over several repayments, typically between three and twelve months
  • ‘running credit’ or ‘flex credit’ – the way this works is similar to a bank overdraft, borrowers and given a 'limit' that they can draw up to as an when they need to, provided they pay at least the interest off each month. While the credit agreement has not fixed end date, this type of credit is expensive and intended for short term use only.

Types of complaints we see

We get complaints from consumers who tell us that lenders:

  • lent them money without checking that they could afford it, and now they have a lot of extra interest and charges that they can't pay
  • were unreasonable or unfair when their financial situation changed
  • weren't clear about when payments were due

What we look at

Like all lenders, short-term lenders need to make sure that they’re giving credit in a responsible way. They need to complete reasonable checks to make sure you can afford to repay a loan before agreeing to it. There's a range of information that lenders could use as part of their checks, including your income, regular outgoings, borrowing and repayment history with that lender and their broader use of credit (for example reviewing a credit report).

We’d expect to see that a lender gathered more information - and more evidence of the figures used - where:

  • the loan repayments took a large proportion of your income
  • you were repeatedly coming back for more money
  • the length of the loan or total amount repayable was higher

On the other hand, we might agree that it's proportionate for a lender to have gathered less information if you hadn't already needed to borrow from them before, your loan was for a shorter period, or where the repayment was a small proportion of your income.

How to complain

If you’ve borrowed money and you feel you’ve been treated unfairly by a lender, the first step is to contact them and explain why you’re unhappy.

If you don’t get a response to your complaint or if you’re unhappy with the response, contact us. And if you’re not sure where to start, get in touch with us and we’ll do what we can to help.

Find out more about how to complain.

Putting things right

If we think something has gone wrong, and you’ve lost out as a result, there are a range of things we might ask a lender to do to put things right, depending on the circumstances. This usually involves putting you back in the position you’d be in if things hadn’t gone wrong. It might include, for example:

  • refund the interest and charges you’ve paid
  • adjust any outstanding balances, if they still exist
  • update your credit file
  • make an appropriate payment where we think you’ve suffered particular distress or inconvenience as a result of the lender’s actions

Case study

I was in a car accident and now I’m worried because I can’t make my loan payments

Catherine contacted her lender to say she’d been in hospital the day her loan was due, and that she’d need more time.

Consumer Credit

Read more 

Resources

Stepchange helps people sort out debt problems for free.

The Money Advice Service gives free unbiased advice on financial choices.

Detailed advice for businesses

Businesses can find out more in our detailed information about handling complaints about payday loans and short-term lending.

Back to top
Print this page
Share this page
  • Send by email
  • Tweet about this
  • Share on LinkedIn
  • Share on Facebook

Call us

Our phone lines are open
8am – 5pm on Monday to Friday.
At times, you might need to wait
to speak to someone.




Get in touch

0800 023 4567

Connect with us

  • Follow us on Facebook
    Follow us on Facebook
  • Follow us on LinkedIn
    Follow us on LinkedIn
  • Follow us on Youtube
    Follow us on Youtube
  • Follow us on Twitter
    Follow us on Twitter
  • Accessibility
  • Join us: careers
  • Corporate information
  • Legal info
  • Cymraeg
  • Privacy policy
  • Freedom of information
  • Procurement
  • Cookies
  • Data protection and SARs
  • The Modern Slavery Act

©2021 Financial Ombudsman Service