How to Dispute a Payday Loan or High-Cost Credit Agreement in the UK
Before Wonga collapsed in 2018, it paid out over £400 million in redress to customers it had lent to irresponsibly. That figure was not a goodwill gesture. It was the result of the FCA making clear what the law had always said: responsible lending is a legal obligation, not a courtesy.
Under CONC 5.2 of the FCA's Consumer Credit sourcebook, every lender — payday, doorstep, logbook, or buy-now-pay-later — is legally required to conduct a proper affordability assessment before approving credit. If they did not, and you ended up in a spiral of debt, rolling over loans or borrowing again just to repay the last one, you are not just unlucky. You have a legal basis to demand a refund of all interest and charges — plus 8% simple interest on top, calculated from the date of each payment.
The Financial Ombudsman Service (FOS) upholds approximately 60% of payday loan affordability complaints it reviews. The process is free. You do not need a solicitor or a claims management company. You need the right letter, the right evidence, and the right sequence. This guide gives you all three.
Key facts
- —Regulator: Financial Conduct Authority (FCA)
- —Rulebook: Consumer Credit sourcebook (CONC), specifically CONC 5.2 (responsible lending assessments)
- —Redress route: Formal complaint to lender → Financial Ombudsman Service (FOS) → county court as last resort
- —FOS time limit: 6 months from the lender's final response letter
- —Lender complaint deadline: Lender has 8 weeks to respond
- —Limitation: Loans more than 6 years old may be time-barred — check with lender
What counts as unaffordable lending?
Under CONC 5.2A, lenders must conduct a reasonable creditworthiness assessment before approving any regulated credit agreement. That assessment must take into account the borrower's income, outgoings, existing credit commitments, and credit history. A lender that approves a loan by running only a soft credit check — or by accepting self-declared income without verification — and then approves an amount the borrower plainly cannot afford, has failed that obligation.
“Unaffordable” has a specific meaning in this context. The FOS considers lending unaffordable where repayment of the loan:
- Required you to borrow again — from the same lender or another — to cover repayment
- Caused you to default, miss a payment, or incur arrears
- Led you to miss essential bills: rent, utilities, food, council tax
- Left you with no realistic ability to repay without distress
The FOS uses four primary red flags when assessing whether a lender should have recognised a loan as unaffordable:
1. Multiple loans in quick succession — the rollover pattern
If you took out several loans from the same lender within weeks or months of each other, the lender could see this in their own data. Repeated borrowing is itself evidence that previous loans were not manageable.
2. Loan-to-income ratio clearly too high
If the repayment amount represented a significant proportion of your monthly income — particularly when your outgoings were already high — the lender should have identified this in their assessment.
3. Poor credit history visible at application
If your credit file showed existing defaults, missed payments, or other credit in difficulty at the time you applied, a reasonable lender should have declined or offered a lower amount. Approving despite this is a CONC 5.2A failure.
4. Evidence of financial distress in the customer's bank data
Many lenders used open banking or required bank statements. If your bank data showed a pattern of missed direct debits, low balances, or overdraft usage, that data should have informed the decision.
Which lenders can you still claim against?
Whether you can make a claim depends on whether the lender still exists and what route is open.
Still trading — complaint to lender, then FOS
- Cashfloat — authorised lender, formal complaint route open
- Sunny (now Lantern Loans) — trading under new ownership
- Everyday Loans — higher-cost personal loans, FOS complaints active
- Amigo Loans — operating under a scheme of arrangement; check their specific claims process at amigomoney.com
In administration — claims via administrator portals
- QuickQuid / Casheuronet — in administration with KPMG; register claims at the administrator's portal
- WageDay Advance — administrator redress scheme; check KPMG's QuickQuid claims website for consolidated guidance
- Sunny / CURO Transatlantic — separate administration to the relaunched Lantern brand; check for open claims window
- PiggyBank — in administration; claims via the appointed administrator
Administrator schemes pay out at a fraction of the full claim — often pence in the pound — depending on the size of the creditor pool and available assets. Even so, registering is always worth doing; you lose nothing by submitting.
Already gone — no recovery route
- Wonga — collapsed in 2018. The administration closed. No further recovery is available unless you were registered in the original scheme.
- Uncle Buck — wound down. No active redress scheme.
Buy-now-pay-later: a developing area
Products offered by Klarna, Clearpay, and Laybuy were largely unregulated before the FCA's 2022 review. Following that review, CONC now applies to certain BNPL products. If you took out BNPL credit after the regulatory changes came into effect and believe you were approved without a proper affordability check, the same complaint route applies. Check whether your specific product and provider are FCA-authorised at register.fca.org.uk before proceeding.
Don't use a claims management company
Claims management companies (CMCs) take 20–30% of any redress you receive. The FOS process costs you nothing. CMCs do not have access to any information or route that you do not have directly. Using one costs you a significant portion of money you are legally owed.
How to write your complaint letter
A strong unaffordable lending complaint is specific, evidenced, and grounded in the right legislation. Here is the exact sequence.
Gather your evidence
You need: bank statements from the periods when loans were taken out and repaid (showing repayment impact on your balance), all loan agreements, any credit reports you can obtain from the application period. If you no longer have documents, request them from the lender under section 77/78 of the Consumer Credit Act 1974 — they are legally required to provide a copy of your agreement within 12 working days.
Calculate what you are claiming
Total up all interest and fees you paid across every loan from this lender. Then calculate 8% simple interest on each payment from the date you made it to today. This is the standard FOS redress formula. Be precise — a clear figure in your letter anchors the complaint and makes it harder to dismiss with a partial offer.
Write to the lender's complaints team
Address the letter to the complaints team specifically — not customer service. State clearly: (a) the specific loans by date and amount, (b) your financial position at the time — income, outgoings, other credit — and why the loans were unaffordable, (c) that the lender failed its duty under CONC 5.2A to conduct a proper creditworthiness assessment, and (d) the exact sum you are claiming: full refund of interest and charges plus 8% simple interest.
Quote their own data back at them
If the lender required bank statements or used open banking at application, remind them of what that data showed: missed direct debits, low balances, existing overdraft use. If they ran a credit check, your credit report from that period should show any existing defaults or credit commitments visible at the time. This forces them to explain why they approved the loan anyway.
Set a 28-day deadline
Give the lender 28 days to respond with a full and final settlement offer or a substantive rejection. The FOS will expect to see that you gave the lender an opportunity to respond before escalating — a 28-day deadline is reasonable and shows you acted in good faith. The lender formally has 8 weeks, but a deadline in your letter focuses minds.
If the lender rejects or ignores you
Ignored after 8 weeks
If the lender does not send a final response within 8 weeks of your complaint, that alone entitles you to go straight to the FOS. Do not wait further. A non-response is a deadlock.
Rejected — go to the FOS
The FOS upholds approximately 60% of payday loan affordability complaints (based on FOS annual complaints data). The lender's rejection is not the end — it is the trigger to escalate. You have 6 months from the date of the lender's final response letter to refer the complaint to the FOS. Do not let that window expire.
The FOS process
Submit online
File your complaint at financial-ombudsman.org.uk. Attach your original complaint letter, the lender's final response, your calculation of redress owed, and key evidence (bank statements, loan agreements).
Investigator review
An FOS investigator reviews the file and reaches a view — typically within 3–6 months. Most cases settle at investigator level. The investigator will contact the lender and invite them to settle.
Formal ombudsman decision
If the lender rejects the investigator's recommendation, the case goes to a formal ombudsman. Their decision is binding on the lender — up to £415,000 — provided you accept it. You are not bound: you can reject and pursue court if you disagree.
County court enforcement
If the FOS finds in your favour and the lender fails to pay, you can enforce the decision in the small claims court. This step is rarely needed — lenders comply with FOS decisions.
Time limits to know
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Write my letter now →What not to do
Don't use a claims management company
They take 20–30% of your redress and do nothing you cannot do for free via the FOS. You have every right and every tool to bring this complaint yourself.
Don't assume a settled loan means you can't claim
You can claim redress on fully repaid and fully settled loans. The complaint is about the lender's conduct at the time they approved the loan, not your current account status.
Don't miss the FOS 6-month window
Once the lender sends a final response letter, the clock starts. Six months is the hard deadline for FOS referral. The FOS has limited discretion on late complaints and routinely declines them.
Don't accept a partial offer without checking the calculation
Lenders sometimes offer a partial refund, hoping you'll take it. Before accepting, verify it covers all interest and fees paid across every loan in the sequence, plus the 8% statutory interest from each payment date. If it falls short, reject it and go to the FOS.
Legislation that applies to payday loan and high-cost credit disputes
CONC 5.2 and CONC 5.3 — affordability
The FCA's Consumer Credit sourcebook rules requiring lenders to conduct a proper creditworthiness assessment and not to approve credit where repayment would be unaffordable. CONC 5.2A sets out the specific assessment requirements.
FCA PRIN 6 — treating customers fairly
Principle 6 of the FCA's Principles for Businesses requires firms to pay due regard to the interests of their customers and treat them fairly. Approving an unaffordable loan and then pursuing the debt is a breach of this principle.
Consumer Credit Act 1974
The foundational statute governing regulated consumer credit in the UK. Sets out rights to information (s.77/78), requirements for default notices, and the regulatory framework within which FCA rules operate.
Financial Ombudsman Service jurisdiction
The FOS has jurisdiction over complaints about FCA-authorised lenders. Its awards are binding on firms up to £415,000. Referral is free for consumers and does not require a lawyer or CMC.
Further reading: see our guide on how to complain to the Financial Ombudsman Service and our post on APP fraud reimbursement if your financial difficulties stemmed from a bank transfer scam.
Write your payday loan complaint letter within 5 minutes
Fight My Corner writes your formal complaint letter citing CONC 5.2A, listing the specific loans, and calculating the exact redress owed — including 8% interest from each payment date. The letter the lender cannot dismiss and the FOS will take seriously.
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Write my letter now →Frequently asked questions
Can I claim a payday loan refund if I've already paid it off?
Yes. You can claim redress on fully settled payday loans. The complaint is about the lender's affordability assessment at the time of approval, not your current account status. You are claiming a refund of interest and charges paid, plus 8% simple interest on top.
How long do I have to complain about an unaffordable payday loan?
There is no strict time limit for the initial complaint to the lender, though loan data may be deleted after six years. Once the lender issues a final response, you have six months to escalate to the Financial Ombudsman Service. The FOS may still consider older loans if you only recently became aware of the affordability issue.
What does CONC 5.2 require lenders to check?
Under CONC 5.2A of the FCA's Consumer Credit sourcebook, lenders must conduct a reasonable creditworthiness assessment before approving credit. This includes checking income, outgoings, existing debts, and credit history. They must not approve credit if the repayments would be unaffordable — meaning you would have to borrow again to repay, default, or miss essential bills.
Do I need a claims management company to get a payday loan refund?
No. The Financial Ombudsman Service is free to use. Claims management companies (CMCs) take 20–30% of any redress you receive and do nothing you cannot do yourself. You write to the lender directly, then escalate to the FOS if needed — at no cost.
What if the lender has gone into administration?
Some failed lenders — including QuickQuid (Casheuronet), WageDay Advance, and Sunny/CURO — have administrator redress schemes. You register your claim via the administrator's portal, not the FOS. Check the administrator's website for the claims process and deadline. Lenders that have fully wound down with no scheme (such as Wonga after 2018) typically offer no recovery route.
Fight My Corner provides dispute letter generation tools and guidance — not legal advice. For complex cases involving significant sums, or if court proceedings have already started, consider seeking advice from a consumer credit solicitor or your local Citizens Advice bureau.