Can you get refunds from catalogues, credit cards & overdrafts?

Have you had a catalogue or a credit card where you were given a high credit limit? So high that the minimum repayments were hard to manage without borrowing more? Many people were originally given sensible limits, but the lender kept increasing them.

This approach can also be used for overdrafts if your limit was increased.

Thousands of people got refunds from payday loan complaints in 2016, see How to get a payday loan refund for more information. Some people have been wondering if the same “rules” apply to other types of unaffordable borrowing. They do!

Catalogue and credit card irresponsible lending complaints are similar to payday loan affordability complaints. But  they are not as easy to win and there are some extra points that matter… So here is a new article just for catalogues, credit cards and overdrafts.

You may have good complaint that the lender was irresponsible in allowing you to borrow so much that the debt was unaffordable. You can complain to the lender and ask for a refund of the interest you paid. There is a template letter below.

What is “responsible lending”?

The following is my summary of the regulator’s rules about affordability and responsible lending:

• A lender must check if credit is affordable when you apply for it. A mortgage lender will ask for bank statements, but a catalogue offering a £200 credit limit doesn’t have to go into so much detail.

• If you can’t make the monthly repayments without difficulty, credit isn’t affordable. This means being able to pay all your normal household bills, expenses and your other debts.

• If you have to borrow more most months, this would not be affordable. This could be borrowing on the same account – making a credit card repayment but then using the credit card to pay for food so the balance never drops is “borrowing more”.

• You have to be able to repay a debt within a reasonable period of time. Paying the minimum amount is OK for a short while, but if you did this for a long period, this suggests the debt isn’t affordable.

• A lender shouldn’t increase a credit limit without new checks. Just because you have been able to make your repayments so far doesn’t mean you can manage a larger limit.

Good reasons to complain

If the lender could see any of these on your credit record, they should have declined your application:

• increasing mortgage arrears;

• a lot of recent payday loans or other high-cost short-term lending such as guarantor loans, logbook loans, doorstep lending;

• recent credit record problems: defaults, a lot of missed payments, or arrangements to pay;

• a level of borrowing from other lenders that appears too high in relation to your income.

Once you had an account, any of the following suggest that you shouldn’t have been given a larger limit:

• only making the minimum payments for a long while;

• if you are using a lot of your credit limit;

• any recent missed payments or arrangements to pay on this account;

• your credit score has got worse since your account was opened – new missed payments, defaults or CCJs on other debts;

• your overall level of debts (as shown on your credit record) has gone up a lot

• you had arrears on other accounts with the same lender.

One reader was allowed to open a second account with Capital One. The Ombudsman decided this was unfair as he had quickly reached and gone over his limit on the first card.

Another reader had applied for a loan and a credit card to his bank but been turned down. But the bank then increased the limit on his overdraft. The Ombudsman decided this was unfair.

Making a complaint

If your lender increased your credit limit, you don’t need the precise date. Being able to say  “In 2014 you increased my credit limit. After that I could only make the minimum payments but you increased my limit again to £3000 in 2015” is fine.

If you have your paper statements or emails, these may help, but if all you can say is “you increased my credit limit several times” that is fine. You don’t need to ask for copies of all your statements – you would get a ton of paper!

But getting your credit record can help:

The 3 best ways to check your credit score & records – all free!

Keeping an eye on your credit reports is a good idea, but how should you do it?

In 2022 there are more than sixteen different ways to check your credit record!

The myth of a single credit score

You don’t have “one credit score” or “one credit record”. You have three different ones.

This is because there are three main Credit Reference Agencies (CRAs) in Britain:

• Experian;

• Equifax; and

• TransUnion  (used to be called Callcredit).

Each CRA has a record of your data which has been sent to them by the lender. Some lenders report to all three, but most lenders only report to one or two CRAs. In 2016, about 50% of lenders only report to one CRA, for example, many payday lenders only report to TransUnion.

So a report on your Experian file can look very different from a report on your Equifax file. None of them are “better”, they are just reporting on information from different lenders.

Top Three credit reports – all free!

Tens of thousands of people are paying for expensive subscription services when they could get all the information they need for free.

Everyone should use one of the following top three credit record checkers or, even better, all three:

• MSE’s Credit Club for Experian details - http://www.moneysavingexpert.com/creditclub

• Clear Score for Equifax details - https://www.clearscore.com/

• Credit Karma for TransUnion (Callcredit) records – this replaces the old Noddle report - https://www.creditkarma.co.uk/

They are all free, no sneaky free first month then a high charge if you forget to cancel.

What you are looking for is the point at which the lender made an irresponsible lending decision. For a few people that will have been when you applied to open the account. For many people, it will have been when your credit limit was increased.

TEMPLATE WHEN YOU DON'T KNOW DATES OF LENDING OR INCREASES

Here’s a general Irresponsible Lending Complaint template you can use, even if you don’t know the dates of lending and increases. 

[Your Name]
[Your Address]
[Your Email]
[Your Phone Number]
[Date]

[Lender’s Name]
[Address]
[Email]

Subject: Formal Complaint – Irresponsible Lending & Request for Refund of Interest and Charges

Dear [Lender's Name / Complaints Team],

I am writing to formally raise a complaint regarding the credit account I held with you under account number [Insert Account Number if available]. I believe that this credit was granted to me irresponsibly, in breach of your obligations under the Financial Conduct Authority (FCA) rules, particularly those outlined in CONC 5.2A of the Consumer Credit Sourcebook regarding affordability assessments and responsible lending.

Grounds for Complaint:

1. Lack of Proper Affordability Checks – At the time of applying for credit, I was already experiencing financial difficulties. However, you still approved my application without conducting thorough affordability assessments to ensure I could sustainably repay the debt without undue hardship.

2. Unsustainable Lending – The credit facility led to a cycle of borrowing, whereby I was unable to clear the balance due to excessive interest charges and fees. This suggests that my financial position was not properly considered before approval.

3. Failure to Assess My Financial Circumstances – If you had conducted appropriate checks, you would have seen that my financial situation at the time made it unlikely that I could afford the repayments without falling into further debt.

4. Irresponsible Credit Increases (If applicable) – If you increased my credit limit, this was done without proper consideration of my ability to repay, worsening my financial situation.

What I Am Requesting:

Due to your failure to lend responsibly, I request that you:

• Refund all interest, charges, and fees applied to this account.

• Remove any negative markers from my credit file.

• Provide a full breakdown of all payments made, interest charged, and fees applied so I can verify the amount owed to me.

Next Steps:

Under DISP 1.6.1R of the FCA’s complaint-handling rules, you are required to issue a final response within eight weeks. If I do not receive a satisfactory resolution by then, I will escalate my complaint to the Financial Ombudsman Service (FOS) for further review.

Please confirm receipt of this complaint and provide an acknowledgment as soon as possible. I look forward to your response.

Yours sincerely,
[Your Name]

TEMPLATE COMPLAINT PROVIDING FULL INFORMATION

THE MORE INFORMATION YOU HAVE TO SHOW IRRESPONSIBLE LENDING THE BETTER!

[Your Name]
[Your Address]
[Your Email]
[Your Phone Number]
[Date]

Complaints Team
[Creditor’s Name]
[Creditor’s Address]
[Creditor’s Email]

Subject: Formal Complaint – Irresponsible Lending & Request for Refund of Interest and Charges

Dear [Lender’s Name / Complaints Team],

I am writing to formally raise a complaint regarding the credit agreement I held with you under account number [Insert Account Number], which was opened on [Insert Date of Agreement].

I believe this credit was granted to me irresponsibly, in breach of your obligations under the Financial Conduct Authority (FCA) rules, particularly CONC 5.2A of the Consumer Credit Sourcebook, which sets out your duty to ensure responsible lending.

Grounds for My Complaint:

1. Lack of Proper Affordability Checks
   
   

   • At the time of applying for credit, I was already facing financial difficulties, yet you approved my application without conducting appropriate affordability checks.

   • If you had assessed my financial position properly, you would have seen that my income and expenditure did not support sustainable repayments.

2. Unsustainable Lending
   
   

   • The credit facility led to a cycle of borrowing, whereby I was unable to clear the balance due to excessive interest charges and fees.

   • I was forced to use further credit and/or missed essential payments to meet the repayment obligations.

3. Failure to Assess My Financial Circumstances
   
   

   • At the time of taking out this credit, my income was [Insert Income at the Time], and my essential financial commitments included [List Main Expenses, e.g., Rent/Mortgage, Utilities, Food, Other Credit Repayments].

   • Had a full assessment been conducted, it would have been clear that this loan/credit agreement was unaffordable.

4. Irresponsible Credit Increases (if applicable)
   
   

   • You increased my credit limit on [Insert Date(s)] from [Initial Credit Limit] to [New Credit Limit], despite my financial difficulties.

   • There was no clear evidence that I could afford these higher repayments, worsening my financial situation.

Evidence Supporting My Complaint

I have attached relevant evidence supporting my complaint, including:

• Bank statements from [Insert Dates], showing my financial position at the time of borrowing.

• Credit report(s) showing my outstanding debts at the time.

• Correspondence from you confirming credit limit increases (if applicable).

What I Am Requesting:

Due to your failure to lend responsibly, I request that you:

• Refund all interest, charges, and fees applied to this account, totalling £[Insert Amount].

• Remove any negative markers from my credit file related to this account.

• Confirm that my outstanding balance is reduced accordingly or set to £0 if applicable.

• Provide a full breakdown of all payments made, interest charged, and fees applied so I can verify the amount owed to me.

Next Steps:

Under DISP 1.6.1R of the FCA’s complaint-handling rules, you are required to issue a final response within eight weeks. If I do not receive a satisfactory resolution by then, I will escalate my complaint to the Financial Ombudsman Service (FOS) for further review.

Please confirm receipt of this complaint and provide an acknowledgment as soon as possible. I look forward to your response.

Yours sincerely,
[Your Name]

How to Use This Template

• Fill in the placeholders (dates, amounts, account number, etc.).

• Attach any supporting evidence (bank statements, credit reports, emails from the lender, etc.).

• Send via email and/or post (recorded delivery recommended for postal submission).

Don’t be put off with a rejection

If a lender rejects your complaint or offers a low “goodwill” gesture, don’t be put off. In particular, if the lender says you had made all the payments to them on time so they had no reason to think you had problems, you can ignore this – the lender should have made other checks before increasing your credit limit!

When you have a final Response from the lender, or after 8 weeks if you haven’t had a Final Response, send your complaint to the Financial Ombudsman Service (FOS). You can just copy out what you put in your complaint to the lender. The FOS is a friendly service

Timing

These complaints can be made if your account is still open, or if it is closed and settled or with a debt collector. NB complain to the original lender, not the debt collector. 

Old accounts

If your complaint is about an account that you closed more than 6 years ago, you will have to CONVINCE the  Financial Ombudsman that you only found out you COULD complain within the last 3 years. EXAMPLES OF OMBUDSMAN QUESTIONS.  If the account has been open within 6 years but the credit limit raises were more than 6 years ago, you may have difficulty.  These older cases are hard for you to produce much evidence for. Unless you have kept paperwork referring to defaults, DMPs and CCJs before this time as these will have disappeared from your credit record.

But if you feel you have a strong older case and you have some evidence then take it to the Ombudsman and let them decide!

An alternative approach for very old accounts

If your account was opened a long while ago and you defaulted and still owe a balance, perhaps in a DMP, think about asking the debt collector to produce the Consumer Credit Act agreement for the account. There is a template letter for this from National Debtline: Credit agreements – getting information.

If the current creditor (not the original owner) can’t produce a proper copy of the agreement, the debt cannot be enforced in court and you can simply stop paying anything to it. This applies to all credit cards, store cards, catalogues but not overdrafts. Discuss the response you get with National Debtline if you aren’t sure it is adequate.

For older accounts this is more likely to work than affordability complaint, so it’s worth trying first. It is common for debt collectors with an old account (eg pre 2007 MBNA and Egg cards) to be unable to produce correct paperwork.

Poor reasons to complain

You can’t complain just because the interest rate was high or because you have paid them a fortune over the years.

A poor credit score on its own isn’t a reason why you shouldn’t have been given an account. You could have been recently discharged from bankruptcy – that makes a “bad credit card” such as Vanquis or a catalogue an ideal “first new credit” and it may be completely affordable because going bankrupt solved all your previous debt problems.

But if your credit score was poor because you were having a lot of problems with your existing debt, the account should have been refused.

You won’t get a credit card or catalogue refund if something unexpected went wrong in your life. If you had been managing a credit card fine for years but then you lost your job or separated from your partner and you defaulted, this isn’t the lender’s fault.

THERE IS NOT TIME LIMIT ON CLAIMS