Potential charges

The Office of Fair Trading’s (OFT) Irresponsible Lending Guidance (ILG) says that lenders should explain potential charges for late payment, missed payment or underpayment before the borrower takes out the loan.

The ILG states that ‘the explanation should at least give an indication to the borrower of what the approximate level of charges or interest would be.’

The payday loan industry’s customer charter also pledges that your lender will tell you about the total cost of your loan ‘together with fees and charges’ before you apply.

Challenging unexpected charges

If you’re charged unexpected fees that weren’t explained to you when you took out the loan, weren’t available on the lender’s website or weren’t included in the paperwork you received, write to the lender to challenge the charges.

You should cite the Payday and Short-term Loans Customer Charter and the OFT’s Irresponsible Lending Guidance detailed above.

If you’re not happy with the response, put issue a formal complaint in writing to your lender.

Unfair terms

Your rights under the Consumer Rights Act make it easier to challenge hidden fees and charges.

This is because under the legislation the main elements of the contract including the price and any charges must be brought to your attention.

Prior to the Consumer Rights Act these terms were only required to be legible – if you could find them at all.

All contracts must now clearly set out the main elements of the contract and outline the price in a transparent and prominent way which means that information must be the following:

  • Transparent  In plain and intelligible language and, if written, it must be legible
  • Prominent  Brought to the consumer's attention in such a way that the average customer (who is 'well-informed, observant and circumspect') would be aware of the term.

Therefore if the unexpected fees weren’t explained to you when you took out the loan, weren’t available on the lender’s website or weren’t clearly included in the paperwork you received, you can challenge them as an unfair term under the Consumer Rights Act

Complain to the FOS

If necessary, you can take your case to the Financial Ombudsman Service (FOS). 

To refer the problem to the FOS, you should have been trying to seek resolution with the company for eight weeks.  

After eight weeks you're still not satisfied with how the company has dealt with your complaint, then complain to the FOS. 


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