Credit is sought for a variety of reasons. Sometimes, for example, to assist consumers in financing a large purchase – such as a car or a new kitchen. In most cases, a consumer will be able to repay the credit without incident. However, there are times when a lender has given a consumer more credit than they could ever afford to repay, without experiencing financial difficulty.

Complaints that we receive

Consumers occasionally complain to us that their credit was unaffordable and that the lender acted irresponsibly in providing the funds. This is a problem because a consumer may have difficulty repaying what is owed or may be unable to repay at all. We deal with complaints about unaffordable lending across a wide range of credit products, from car loans to payday loans.

Consumers sometimes complain that their lender isn't treating them fairly because their circumstances have changed – for example, they may have lost their job or are only able to work reduced hours.

How to File a Complaint

The first step is to fill out our simple enquiry form and we will contact your lender and explain what happened and why you might be unhappy. They will be given the opportunity to make things right. Unless both parties agree, the Financial Ombudsman Service would normally only look at complaints that a business has had a chance to look into first.

The company should investigate the complaint and provide you with a final response within a certain time frame, typically eight weeks for most types of complaints. If you are dissatisfied with their response, we can also assist in filing the complaint with FOS is there is merit in doing so

Learn more about how to file a complaint.

What we are looking at

If you complain that your lender gave you unaffordable credit or lent to you irresponsibly, we will usually look at whether your lender performed reasonable and proportionate checks before you took out the loan, or whether it treated you unfairly or unreasonable. When agreeing to your loan, lenders must do enough to make a reasonable decision on whether you will be able to make the repayments without difficulty. Lenders are not required to perform any specific checks.

However, when determining whether any checks were reasonable and proportionate, we will consider factors such as:

• how much money did you borrow

• how much you had to repay

• how much you had to pay and how long you had to make them

• what your lender was aware of your financial situation

Putting things back in order

If we believe your lender did something wrong or treated you unfairly, we will request that they make things right. The specifics of how we will request that your lender make things right will depend on the nature of your complaint and how you lost out. However, we will usually advise your lender to:

When a loan was paid off

Refund any interest and charges you paid (if any), plus 8% simple interest; and

Remove any negative information from your credit report.

Where there is still an unpaid balance

Remove all added interest and charges, and ensure that the balance only consists of the amount lent to you.

subtract any previous payments;

If you paid too much, the difference should be refunded to you plus 8% simple interest.

Even after all adjustments have been made, there may be an outstanding balance. And we'll usually say that paying this back isn't unfair. However, there will be some instances where we do not believe this is fair. This will be highly dependent on what has occurred.

FOS may order your lender to pay you additional compensation if they believe you have been caused distress and inconvenience, particularly if they discover that your lender has acted unfairly or unreasonably toward you in some other way.