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Complaining about your lender (Scotland)
This fact sheet covers Scotland. We also have a version for England & Wales if you need it.
Use this fact sheet to:
- understand what you can complain about;
- get tips on making an effective complaint; and
- find out how to take your complaint further.
The sample letter mentioned in this fact sheet can be filled in on our website.
What this fact sheet covers
This fact sheet only deals with companies that give credit, for example banks, hire purchase companies and payday lenders. Usually your agreement will state it is 'regulated by the Consumer Credit Act'. It does not cover companies that provide gas, electricity, water or phone services, and it does not cover councils.
Consumer credit complaints
Companies that carry out consumer credit activities must have permission or authorisation from the Financial Conduct Authority. They must have a formal complaints procedure. If they do not, or if they do not follow the procedure properly, their authorisation may be affected. Without permission or authorisation, a company cannot legally offer credit. Companies that must have permission or authorisation include:
- businesses whose main activity is lending and hiring;
- debt collectors if collecting an amount due under a credit agreement; and
- credit brokers and businesses who offer consumer credit, such as motor dealers and furniture retailers.
The Financial Conduct Authority (FCA) cannot deal with individual complaints. However, as the regulator, they can take action against companies. This means they are interested in collecting information and evidence about poor behaviour. See Useful contacts for details on how to get in touch with the FCA.
If you don’t like how a company deals with your complaint, you may be able to take your complaint to the Financial Ombudsman Service.
Financial Ombudsman Service (FOS)
The Financial Ombudsman Service (FOS) plays a very important part in complaints. It does not have the power to fine or punish businesses, but it can help settle disputes between businesses and consumers. The FOS can look into your complaint and can award compensation to you.
You can only complain to the FOS once you have gone through your lender's complaints procedure. See the later section How to complain.
What you can complain about
The FOS can help with most complaints about UK consumer credit products and services.
- Credit cards and store cards.
- Loans and hire purchase.
- Payday loans and pawn broking.
- Debt collectors that are collecting debt owed under a credit agreement.
Some firms may not be regulated by the FCA, for example non-UK firms. However, some of these firms still voluntarily use the FOS. If your complaint is about a firm that is not FCA authorised, check their complaints policy or speak to the FOS.
The FOS can consider complaints from micro-enterprises and Small and Medium Enterprises (SME).
- Micro-enterprise. A business with fewer than ten employees and an annual turnover (total business takings) of no more than €2 million.
- SME. A business that is not a micro-enterprise, but has fewer than 50 employees and an annual turnover below £6.5 million.
Usually, the FOS can consider complaints for agreements regulated under the Consumer Credit Act 1974. However, they will sometimes be able to help with complaints where the agreement is not regulated. If you know your agreement isn’t regulated but want to know if the FOS can help, contact them to find out. Their details are in the Useful contacts section of this fact sheet. You can also contact us for advice on how to tell if the agreement is regulated and how the FOS may be able to help.
Who can complain?
There are many companies that offer to help people make complaints but charge a fee for doing so. There is no need to pay. It costs nothing to complain to the Financial Ombudsman Service (FOS). You can also call them for free if you need guidance and information on complaining or you can contact us for advice.
You do not need specialist help to complain. The FOS complaints procedure is easy to follow, and you should not be disadvantaged if you don’t have any help. However, if you do not feel happy doing it yourself, you can appoint someone to act on your behalf. You must give them written permission to do this because of data protection rules. The person could be a friend, family member or an organisation such as Citizens Advice. See Useful contacts for how to find your local Citizens Advice.
You can make your complaint through Resolver, a free online service providing information and guidance on complaints. Resolver allows you to set up a case for your complaint, so that you can manage the complaint in one place. It helps you keep records of communication and track progress. It will also tell you who to complain to and how to take your complaint further.
Codes of practice
When you make a complaint, you may be able to point out where a company has done something wrong by referring to rules and standards of practice that it should follow.
Consumer Credit Sourcebook
The FCA’s Consumer Credit sourcebook is a set of rules and guidelines for companies carrying out consumer credit related activities. It includes information on communication, assessing customers’ ability to repay credit and how to deal with customers who struggle to pay. You can search the Consumer Credit sourcebook to see if there are any rules or guidelines that the company should have followed. If you need help with this, contact us for advice.
Standards of Lending Practice – Personal Customers
The Standards of Lending Practice are voluntary standards that firms registered with the Lending Standards Board have agreed to follow. High-street banks are included in the list of firms that have registered with Lending Standards Board. The Standards also apply to any third party that acts on the original lender’s behalf, for example, a debt collection agency. There are two sets of Standards, and the one you use will depend on whether your complaint is about personal lending or business lending.
Standards of Lending Practice - Personal Customers. These Standards may be useful if your complaint is about something that happened on 1 October 2016 or later. If your complaint is about something that happened before 1 October 2016, contact us for advice.
Standards of Lending Practice – Business Customers. For agreements taken out before 1 November 2019, the Standards will apply if your annual turnover was no more than £6.5 million. For agreements taken out after 1 November 2019, the Standards will apply if the annual turnover was no more than £25 million.
UK Cards Association Best Practice Guidelines
If your complaint is about a credit card or store card, you may be able to refer to the UK Cards Association Best Practice Guidlines. You can look on the UK Cards Association’s website to see if your lender is a member.
Payday Loans Good Practice Customer Charter
If your complaint is about a payday loan or a short-term loan, the lender may be a member of a trade association that is signed up to the Good Practice Customer Charter. The charter outlines key commitments that the lenders have agreed to. For more information on dealing with payday loans, including complaints, see our Payday loans fact sheet.
Good Practice Awareness Guidelines
These are guidelines for helping customers with mental health conditions and debt. The guidelines are useful if you have a mental health issue and the lender hasn’t taken this into account when dealing with you. If you have a mental health condition, see our Debt and mental health fact sheet.
Other codes of practice
It is worth checking to see if the company you are complaining about has a code of practice that you can use, or if it is a member of a trade association that has a code of practice.
How to complain
Before the FOS will look at your complaint, you must first complain to your lender. Ask your lender for a copy of their complaints procedure. This will tell you how you can expect your lender to deal with your complaint, and in what timescale.
- Write to your lender explaining your complaint.
- Set out the facts as clearly as you can.
- Say what you are not happy with, and what you want them to do about it.
- Include any evidence that you feel supports your complaint.
- You may find our sample letter Complain to your lender helpful.
By law, your lender has eight weeks to respond to your complaint. The FOS is not able to look into your complaint before this time period is up. They can still offer information and guidance. See the later section Useful contacts for how to contact the FOS.
If you are not happy with your lender’s response to your complaint
If you are not happy with the outcome of your complaint to your lender, or they do not respond at all, you can take your complaint to the FOS.
You have six months from the date of your lender’s final response to take your complaint to the FOS. Often your lender will tell you when their response is final. It may be their only response to your complaint. If you are not sure, ask your lender. If you do not complain to the FOS within six months, they may not be able to help. Time limits may also apply if what you are complaining about happened some time ago, or you left it too long after you knew, or should have known, there was a problem. Contact us for advice.
To make a complaint to the FOS, you need to fill out their complaints form. This is available on their website www.financial-ombudsman.org.uk, or phone them on 0800 023 4567. They can help you to fill the form in over the phone.
The FOS’s decision
The FOS will investigate your complaint and tell you what the outcome is. If your complaint is upheld, the FOS will say what the lender should do to put things right. This may include your lender being told to pay you compensation.
If you accept the decision, it will be binding on the lender. This means they will have to do what the FOS tells them to do, although the lender may ask for the decision to be reviewed. If you do accept the decision, it may stop you being able to take the lender to court for the same complaint.
If you do not agree with the FOS’s decision, let your case handler know as soon as possible and ask that your complaint be looked at again. The FOS will let you know when it has reached a final decision.
If you do not accept the FOS’s decision, the lender does not have to act on any suggestions by the FOS to put things right. There is no right of appeal if you do not agree with the FOS’s final decision, but you can still take your lender to court. See the later section Unfair relationships test.
Unfair relationships test
The Consumer Credit Act 2006 brought in new rules about ‘unfair relationships’ between borrowers and lenders. You may be able to take court action if you feel that the relationship with your lender is unfair to you because of:
- the terms of the agreement with your lender; or
- the behaviour of the lender.
If the court decides that there is an unfair relationship, they have a wide range of powers. For example, the court can change the terms of the agreement or order the lender to pay money back to you.
There is no defined list of what makes a relationship unfair. Although the Office of Fair Trading (OFT) has closed, its website still provides information about unfair relationships and examples of cases which you may find useful.
There is a fee to pay when you put in a direct claim for an unfair relationship. It may be possible to get help with the fee, see the Scottish Courts and Tribunals Service website for further information. Even if you get help with the court fee, making a claim that a relationship is unfair is complicated and you could be asked to pay considerable extra costs if your claim is not successful.
Only a court can decide if an agreement is unfair under the rules. However, it is usually better to complain to the FOS before making a claim for an unfair relationship. This is because taking court action using these rules is complicated and there is a risk of extra costs if your claim is not successful. There is no cost for complaining to the FOS and you can still put in a court claim if you do not agree with the FOS’s decision. See the earlier section Financial Ombudsman Service (FOS).
Contact us for advice if you are considering making an unfair relationship claim.
Your agreement and the unfair relationship rules
The unfair relationship rules apply to new agreements from 6 April 2007 and all existing agreements from 6 April 2008.
The rules cannot usually be used for regulated mortgage contracts. Regulated mortgage contracts include first charge mortgages and secured loans. The rules can be used for some secured loans that were taken out before 21 March 2016, contact us for advice.
If you owe money, your lender or a debt collector is allowed to contact you to ask for payment. However, they must not threaten or harass you. If you think the behaviour of your lender or debt collector might be harassment, you can complain. The FCA’s Consumer Credit sourcebook has rules and guidance on how companies should behave when collecting debts. Contact us for advice if you are not sure whether you can make a harassment complaint.
To find out more, see our Harassment by creditors fact sheet.
Citizens Advice Independent, free advice on debt, housing and benefits Phone: 0808 223 1133 www.citizensadvice.org.uk
consumeradvice.scot Free and independent advice on consumer issues Phone: 0808 164 6000 www.consumeradvice.scot
Financial Conduct Authority Phone: 0800 111 6768 or 0300 500 8082 www.fca.org.uk
Financial Ombudsman Service Phone: 0800 023 4567 or 0300 123 9123 www.financial-ombudsman.org.uk
MoneyHelper Useful information about making a complaint Phone: 0800 138 7777 (English), 0800 138 0555 (Welsh) www.moneyhelper.org.uk