How to claim compensation for mis-sold prohibitive credit on cards, loans and overdrafts

MILLIONS who have missold unpayable card credits, loans and overdrafts could be compensated.

Even those who have already paid off their debts could reclaim thousands if they can show that paying off the debt was difficult alongside day-to-day living.


Millions who have missold bad credit on cards, loans and overdrafts could be compensatedPhoto credit: Getty

Lenders have a duty to assess whether a borrower can afford to repay a loan before granting a loan.

More than half of complaints about unaffordable loans are upheld by the Financial Ombudsman Service, which decides whether a customer is entitled to a refund.

Debt counselor Sara Williams says, “Most people who get into trouble with money fear it’s their own fault, but lenders shouldn’t put big limits on them.”

This week Rosie Murray-West explains who can reclaim – and how to do it.

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ANY of the following products could be worth checking out, according to Sara, who runs debt recovery website Debt Camel:

  • Payday loans intended for short-term borrowing
  • Car finance loan
  • Guarantee loans where a parent or friend had to pay it back if you defaulted
  • Standard personal loans where the monthly repayment was not sustainable due to your financial situation
  • Overdrafts increased without a financial audit
  • Credit cards with high spending limits

Even if you have repaid the loan or closed the bank account, you can still claim it back.


YOU won’t get everything back, but the ombudsman will usually order the companies to pay you back the interest you paid, any incidental charges, plus an additional 8 percent interest.

You will still be expected to pay back the amount you borrowed.

For example, a customer who borrowed £5,000 and repaid £250 over 36 months would be awarded £4,320, made up of £4,000 in fees and charges and 8% interest.

It usually requires that any black spots on your credit report related to debt be removed as well.


THERE IS NO GUARANTEE. However, the Financial Ombudsman confirms more than half of loan complaints after lenders have refused to pay out, so the odds are in your favor.

The ombudsman makes a decision that is legally binding on the company. However, this may take more than three months, so be prepared to wait.

If you still disagree after the Ombudsman has made a decision, your only option is to take the lender to court.

You have to remember that you will have to pay legal fees – and these can cost thousands of pounds. Again, there is no guarantee that you will win.


If the lender does not resolve your issue within eight weeks or you are not satisfied with their response, you can contact the Financial Ombudsman Service.

The clock starts ticking from the moment you make that complaint, whether you do it by phone, email or letter.

You must do so within six months of the company’s response.

You can complain online at finance Or call 0800 023 4567.

In any case, your submission is free.


You should avoid companies that charge a fee to sue on your behalf as this will affect compensation and will not speed up the process


You should avoid companies that charge a fee to sue on your behalf as this will affect compensation and will not speed up the processPhoto credit: Getty

COMPLAINT directly to your lender first. You can do this yourself or use a free dispute resolution service like Resolver (

You should avoid companies that charge a fee to sue on your behalf as this will affect compensation and will not speed up the process.

Debt Camel has free letter templates on their website if you decide to do it yourself, as well as advice on how to customize them.

If your lender is bankrupt, slightly different rules apply, and in some cases you may not be able to claim at all.

Searching the resolver website for the company name should tell you what to do in your specific case.

The lender can repay you immediately. If not, it’s worth fighting on.

If you complain, include evidence that shows you shouldn’t have gotten the loan because the lender should have seen you couldn’t afford it.

Bank statements from the time of borrowing can serve as proof, showing that you already had several loans or were a regular player.

You could also use your credit report from that time as evidence.


% of complaints confirmed by the Ombudsman

guarantee loan: 68%

house loan: 66%

(Also known as Doorstep Loan)

Logbook loan: 62%

(credit secured against your vehicle)

Personal loans: 45%

payday loan: 46%

Overdrafts: 45%

Credit cards: 37%

£442 Free groceries


Photo credit: Getty

THOUSANDS of financially strapped families are missing out on supermarket vouchers worth up to £442 a year.

The “Healthy Start” program offers low-income parents additional help with the purchase of milk, vegetables, fruit, legumes and vitamins.

You must be at least 10 weeks pregnant or have a child under the age of four and be on an eligible benefit to receive support.

New applicants receive a prepaid card that is topped up with digital vouchers every four weeks. Parents can get between £4.25 and £8.50 a week – a total of £442 a year.

Data from website NationalWorld suggests 115,000 are missing out on free assistance.

But as millions of people grapple with a crippling cost-of-living crisis, it’s important to seek all the support you can. For more information visit

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ALMOST 200,000 people have around £2,000 worth of savings they don’t even know they have.

Latest data shows £374million sits untouched in lost Child Trust Funds (CTF).

CTFs were automatically opened by the then Labor government for children born between 1 September 2002 and 2 January 2011. They were then replaced by Junior ISAs.

Children with CTF received a £250 voucher at birth. Lower income families could receive £500.

Children born between 2002 and 2011 also received an extra £250 when they turned seven. Parents could decide whether to invest the money in stocks and stocks or save in cash.

The savings could not be accessed until the child turned 18. But many young adults who come of age don’t even know they have an account – and could be missing out on thousands of pounds.

You can find a lost CTF using the government’s online locator at Parents can also contact HMRC to find an account for their child.

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