The Financial Ombudsman (FOS) has recently published its decision on Miss G’s complaint against Amigo.
This FOS decision criticised Amigo’s inadequate assessment of Miss G’s income and expenses. It said her poor credit record meant Amigo should have verified the figures, for example by looking at bank statements. So FOS ordered Amigo to refund all the interest and charges she paid, plus 8% statutory interest.
Many people with guarantor loans from Amigo or another lender will have poor credit records like Miss G. This new FOS ruling suggests they may be able to win complaints if the loan repayments have caused them problems.
FOS has also published an important decision on a complaint by a guarantor, see Amigo – why the Ombudsman released a guarantor from a loan.
Contents
The Ombudsman’s approach to the complaint
The Ombudsman said he wanted to consider the following points:
- Did Amigo complete reasonable and proportionate checks to satisfy itself that Miss G would be able to repay her loans in a sustainable way?
– If so, did it make a fair lending decision?
– If not, would those checks have shown that Miss G would’ve been able to do so? - Bearing in mind the circumstances, at the time of each application, was there a point where Amigo ought reasonably to have realised it was increasing Miss G’s indebtedness in a way that was unsustainable or otherwise harmful and so shouldn’t have provided further loans?
- Did Amigo act unfairly or unreasonably in some other way?
He summed this up by saying:
In practice this meant that Amigo had to reasonably conclude that making the payments to the loan wouldn’t cause Miss G undue difficulty or adverse consequences.
He pointed out that Amigo had to ensure the loan was affordable for the borrower. The fact there was a guarantor, doesn’t mean this check on the borrower is less important.
What are “proportionate checks”?
The FCA, who regulates lenders, does not say exactly how a lender has to check a loan is affordable. But the Ombudsman suggested that in general more checks were needed:
- the lower someone’s income was,
- the larger the loan was,
- the longer-term the loan was, and
- the more there had been previous borrowing from the same lender.
What checks did Amigo make?
The Ombudsman started by looking at the affordability checks Amigo made. He concluded:
I found that Amigo appeared to be relying heavily on the online questionnaires, which it asked Miss G to complete, as well as the telephone calls it had with her, in order to assess her expenditure and determine her ability to sustainably repay this loan.
But her credit record showed she had a large overdraft and payday loans when she applied for the first loans and had more borrowing before the later loans. The Ombudsman said:
I couldn’t see how Amigo could have reasonably concluded the completed questionnaire was accurate and that Miss G had a disposable income of almost £1000 a month, bearing in mind what it saw on her credit file.
He considered Amigo had not made adequate checks:
I thought that as well as asking Miss G about the details of her income and expenditure, Amigo needed to take steps to verify what it was being told. It could have done this by asking for information such as bank statements, copies of bills, or even proof of Miss G’s income.
Amigo argued that it had checked Miss G’s stated expenditure against national averages. The Ombudsman did not think that was adequate:
I also have concerns with Amigo using national averages to verify Miss G’s expenditure when it knew that she had an adverse credit history. National averages are based on the finances and expenditure of the average consumer. But Amigo knew, when it lent to Miss G, that it was providing a loan to someone who’d had an adverse credit history and therefore someone fell outside this average portfolio.
What would proper checks have shown?
The lender not making adequate checks is not enough on its own to win an affordability complaint. It is also necessary for the proper checks to have shown that the loan was unaffordable.
So the Ombudsman looked at bank statements and credit records in detail to decide if Miss G could afford the loans and he found:
she was continually in her overdraft in the months leading up to [the loan one] application. … as Miss G’s income was only half the amount she was overdrawn by, she was never likely to see a credit balance even when she received her monthly salary. I also observed that Miss G was struggling to make ends meet. And that is why she had taken out so many payday loans in the period leading up to loan one and she continued doing so after this.
I also found that Miss G’s finances had actually worsened by the time of loan two. She owed more on credit cards and by that stage had accrued catalogue debt and a number of other loans too. By the time of loan two, Miss G was taking even more short-term loans, from even more providers, as she, in vain, attempted to try and stabilise her finances.
And for loans 3-5, the Ombudsman did not look in detail, saying:
looking beyond loan two, I found that Amigo ought fairly and reasonably to have realised that Miss G’s financial position was so distressed that further loans were simply unsustainable for her.
Amigo thought that Miss G’s credit file at the time of her first loan showed that she was managing her debts well as payments to all but one of her creditors had been maintained perfectly.
The Ombudsman didn’t agree. Miss G’s overdraft was larger than her income and she used payday loans regularly. She was also only able to make minimum payments to her credit card which would take a lot longer to clear than the three years Amigo suggested.
And he said:
Miss G’s increasing debt burden and the payments she missed on her Amigo loans were clear indicators that she wasn’t managing her repayments to her existing creditors well. I’d also argue that Miss G wanting or needing to take out five loans in less than four years (for increasing amounts) was, in itself, indicative of someone who was struggling to manage their money.
Amigo said its lending decisions are not based on a borrower’s credit history as its loans are intended to help people with a poor credit record. But the Ombudsman replied:
my point here isn’t that a lender shouldn’t ever lend to a customer that already has existing credit commitments or someone who has had a payday loan in the past. What I’m saying is that further scrutiny needs to be applied and greater care taken in these circumstances to ensure that any further lending can be sustainably repaid.
And he also pointed out that although Amigo promotes these loans as way of improving a credit record, it should have seen that Miss G’s credit record was getting worse, not better.
The Ombudsman’s conclusions about Miss G’s case
The Ombudsman summarised his findings:
I find that:
- Amigo didn’t complete reasonable and proportionate checks on Miss G to satisfy itself that she was able to repay any of these loans;
- reasonable and proportionate checks would more likely than not have individually shown Miss G was unable to sustainably make the repayments for loans one and two;
- Amigo ought fairly and reasonably to have realised that the loans from loans three onwards were unsustainable or otherwise harmful for Miss G and were unfairly and excessively increasing her overall indebtedness;
- Amigo didn’t act unfairly or unreasonably towards Miss G in some other way.
So Amigo was ordered to refund all interest and charges on all the loans and top-ups, plus 8% statutory interest.
Implications for other guarantor loan cases
One Ombudsman’s decision is not a precedent for other cases. So all other Amigo decisions or guarantor loan cases don’t have to reach the same conclusion.
But many of the points the ombudsman mentioned are likely to apply to other people who have borrowed from a guarantor lender:
- The Ombudsman’s initial questions are typical of what FOS is using across a range of other high-cost credit including payday loans, doorstep lending and logbook loans. It seems likely that this general approach will now be used for other guarantor loan complaints.
- Most guarantor loans are large and long-term, two of the criteria the Ombudsman mentioned as indicating more detailed checks have to be made by the lender.
- Miss G had a number of loans and top-ups. But the Ombudsman ordered a refund from the first loan, showing that single loan cases may well be won.
- Most people applying for a guarantor loan will have a poor credit record and many will have high cost borrowing. So the Ombudsman’s concern that national averages are not an accurate check on someone’s stated expenditure in these situations may apply for many guarantor loan complaints. And the same would apply to using a Credit Reference Agency to assess people’s expenses.
How to complain about a guarantor loan
If a loan from Amigo or any other guarantor lender has caused you difficulty, think about complaining. When the loan has been repaid you can ask for a refund. If you are still paying it, the interest should be removed so you only repay what you borrowed.
See How to complain if you are the borrower for a guarantor loan for details, including a template letter for your complaint.
The comments below that article show how other people are doing with their cases. In June and July 2019, Amigo has been making good offers itself to some people who have complained. And many people are winning their complaints if they go to the Ombudsman!
If you are the guarantor for a loan you can also complain. Here if you win the complaint you may be removed as the guarantor and you may have any payments you have made refunded. There is a different template letter for guarantors to cover the reasons they may have for saying they should not have been accepted as guarantor.
How to complain about your guarantor loan
Complaints by the guarantor for a loan
More refunds for Amigo loans!
Natalie D says
Hi,
My complaint was originally rejected by Amigo so I took it the FOS & they have just (on Monday) upheld my complaint against them, with the same reasons as above. Amigo have been ordered to refund all interest & charges from all 3 loans plus 8% interest, which has resulted in a nice amount of over £14k in my bank account.
All thanks to the information on this telling you how to make a complaint.
Thanks Sara
Sara (Debt Camel) says
great result for you!
Robin says
Hi Sara
I have just put in a complaint with FLM/Amigo, using the template from Debt Camel, for a loan starting in 2010 and I then had 2 subsequent top-ups. They replied pretty quick, but said their records didn’t go back that far and are having trouble finding my information, saying “Due to our data retention policy, some of your information has since been removed from our system due to the date of when your most recent loan was settled”. They are still looking into the complaint but do they really destroy records of previous loans?
Sara (Debt Camel) says
They may do. Can you get bank statements to show how large the loans were and how much you paid to them?
Robin says
Yeh, I’ve got all my bank statements from 2009 onwards and the FOS also has them form my previous complains about payday loans companies.
Sara (Debt Camel) says
OK, then send the complaint back to Amigo with your copies of your bank statements for that time and ask them to look at your complaint, or you will be sending it to FOS.
Robin says
Good idea, thanks Sara
BJones says
i Had a shorter ombudsman decision early last year saying national averages for 7 loans was enough and it was my fault I provided wrong information. I was deep in my overdraft and had loads of other loans and was desperate for money. Can my case be looked at again by this ombudsman. not fair that I lose out
Sara (Debt Camel) says
I understand why it feels unfair.
Was your previous complaint an affordability complaint? If you were complaining that you weren’t treated fairly or the interest was too high, then an affordability complaint would be rather different.
Did you ask Amigo (or whoever the lender was, same for all of them) for a Subject Access request, getting a copy of all of your data?
Is your loan still going?
BJones says
it was about affordability. amigo kept phoning me to say I was able to have more because I had made payments on time. My guarantor made some of them but because I was drowning in debt I took the extra cash not realising I was making it worse. it is so unfair that my ombudsman said everything was fine and says most of the stuff amigo said to me but another ombudsman who seems to know what they are saying looks at another case properly and says pay compensation. really sad about this
Sara (Debt Camel) says
is the loan still being paid? and are you on good terms with the guarantor still?
BJones says
yes i’m still paying the loan and my i’m still on good terms with my sister who is the guarantor.
Sara (Debt Camel) says
OK. it seems to me (and I am literally making this up as I type – there is no experience to go on here) that you have various possible tactics to try to get your complaint reconsidered or a new one looked at.
A) ask Amigo if they would look at your case again. This may sound unlikely to work, but Amigo seem to be trying to handle complaints better and in line with FOS’s approach to affordabilty, so it’s not impossible.
B) ask FOS if they will look at it again. I suspect they will say you need to ask Amigo for another referral right, but I could be wrong.
C) ask Amigo for a copy of all your personal information (SAR) and sift through that to try to come up with NEW EVIDENCE that something important was either not mentioned in your first case or Amigo misdescribed it. This really has to be something new, not just FOS making a different decision from the same info they had last time. Again FOS may say they won’t reopen the case, but more likely than (B) to work?
D) get your sister to put in a complaint about the current loan and any previous loans where she had to make any payments. She should complain that Amigo did not do proper checks that you could afford the loan. You can help her with this by putting in a SAR and giving her your bank statements and credit record – that’s why I asked if you were on good terms!
She may also be able to complain that she herself couldn’t afford the loan, but what you want here is for FOS to make a decison that the loan were unaffordable for you – if she can get that decision then Amigo may respond by refunding you the interest and if they don’t you then have a good reason to put in a new complaint to Amigo and then on to FOS.
What do you think?
david says
The decision I received only a couple of days ago does say that using national averages, while not malpractice, is not sufficient ON ITS OWN. So to see someone who complained a while back didn’t get the “benefit” of the more recent FOS stance on guarantor loans does seem very unfair.
I too was stuck in an ever increasing overdraft while they also did not look into my expenses well enough according to the FOS decision. plus to have Amigo literally cold call you to take out top-ups, its weird that FOS never took this into account first time round.
I personally think Amigo have now taken a turn, they were super quick sorting out the refund for me, so I’d start off with Sara’s “A” and go from there.
Hope something comes of it for you.
BJones says
I will ask Amigo to reconsider. Thanks a lot for the advice. I will let you know what Amigo day.
Sara (Debt Camel) says
ok, if they say No, I suggest you move to plan D
Sara (Debt Camel) says
And read this comment: https://debtcamel.co.uk/how-to-complain-guarantor-loan/comment-page-6/#comment-310653 …
That suggests plan D will work!
Rintyrad says
Hi all – i lodged my irresponsible lending complaint against Amigo with the FOS on 08/11/2019, has anyone had their complaints reviewed from before that – seem to be taking their time to look into these – nearly 9 month!
Sara (Debt Camel) says
the best place for comments about a borrower complaint already in progress is over on the main page https://debtcamel.co.uk/how-to-complain-guarantor-loan/ as more people will see it there.
RobertoCarlos. says
I haven’t been to a FOS just yet but this is a response I got from amigo what’s should I do now I have requested for all the info and SAR….
Following a further review of your account, I can see that we have actually already investigated and addressed your concerns in December 2016 regarding whether it was appropriate to lend to you.
As such, we will not be investigating this matter for you again, and your complaint has been removed. I’m sorry that my previous email confirms otherwise. Although, please let us know if you would like a further copy of our response from December 2016. I can also assure you that your request for information has been raised, and will be gathered and sent to you within 30 days.
This is what the sent me back what should I do now and how do I approve the FOS I really need help with this please.
Sara (Debt Camel) says
There are a couple of options here. So I know which one is most likley to work, could you answer the following questions:
– do you still owe money on this loan?
– has your guarantor had to make any payments on this loan or any previous ones?
– are you on OK terms with your guarantor?
– what exactly did you complain about in 2016 – was it a complaint that their interest was too high, or they were harassing you, or did you say the loan was unaffordable and they did not make proper checks?
– in 2016 did you ask for a copy of all your personal information?
Zoe says
I received a response from Amigo yesterday upholding my complaint without me having to go through FOS. It took almost the full 8 weeks for their response but I’m very pleased
Sara (Debt Camel) says
Good news. Did you just have the 1 loan from them?
Zoe says
Hi Sara
Yes, I only had one loan with Amigo, I also got a refund from Bamboo a couple of weeks ago on the guarantor loan I had with them. I wasn’t expecting them to agree with my complaint as I only had one loan with each but I was thrilled with the result. I’m not sure how you have the time to run this on your own Sara but you do an amazing job. Thanks for helping me & so many others who wouldn’t have known to do this without you, you’re a legend. X
Amy says
Is the 8% on the loan amount or on the interest amount?
KT says
Hello,
My partner put in an affordability complaint to amigo at the end of July. He waited 8 weeks and chased up amigo who advised they were looking into it. He waited another week and chased again to be told he had been emailed to advise it had been rejected before he had chased the first time. So he was told 2 different things. He has since chased a copy of this email on at least 4 separate occasions and to this day still hadn’t received a rejection response.
He escalated this to the FOS nearly 9 weeks ago and he has chased on several occasions to keep being told that they are waiting on information from amigo.
Is there a cut off for fos to get information from amigo as every time he calls it seems he is getting fobbed off.
Any help would be grateful.
Thank you
Sara (Debt Camel) says
Does he have a loan he is still paying to Amigo?
Kt says
He is yes but in theory he has paid the loan he is now paying purely interest
Sara (Debt Camel) says
Sorry I missed your reply. The best place for comments and questions is on the main guarantor loan page: https://debtcamel.co.uk/how-to-complain-guarantor-loan/.
There isn’t really a set timescale. But I think you can reasonably say that Amigo are not treating you fairly. Here is a comment where i suggest someone leaves a bad reviwe on Trust Pilot and emails the FCA. You could do the same, chaninging the words obviously to make it clear how obstructive Amigo are being. https://debtcamel.co.uk/how-to-complain-guarantor-loan/comment-page-15/#comment-330050
What is his current financial situation like? What is his guarantor’s financial situation?
Kt says
Thank you for the reply.
He pays it every month on autopilot, but it leaves him short every month making him stressed out for anything else.
He has no idea about his guarantors financial situation anymore.. but I know they wouldn’t be able to help if it came to it.
Sara (Debt Camel) says
I wasn’t going to suggest his guarantor could help him. I was going to say if he knows his guarantor could NOT afford it, then perhaps his guarantor too should put in an affordability complaint? There is a separate page for this, see https://debtcamel.co.uk/amigo-complaints-by-guarantor/. If his guarantor could win a complaint and be released from the guarantee, your partner could then just start paying Amigo a lot less while his complaint goes through the Ombudsman.
Penny says
Hi Zoe and Sara,
I also had a loan with Amigo and Bamboo – Please could you help me to make a complaint? I suffer terribly with anxiety and depression and at the moment my brain feels like a constant fog.
I have made huge mistakes and took out many payday and guarantor loans last year, mostly to fund a gambling addiction that is now thankfully under control.
I’m terrified that I will be sent away for using the money for gambling. Would I still have a case?
Thank you
Penny
Sara (Debt Camel) says
Hi Penny,
well done for stopping gambling. That is the vital first step.
Sorry to hear about your anxiety and depression, that can make it hard to take action, but if you can make these affordability complaints they could really help your finances and that in turn can help ease your stress. So well worth trying, I won’t lie and say they are guaranteed to work but a LOT of guarantor loan complaints are being won and you have nothing to lose apart from a bit of time to send an email.
Making a complaint is very easy. This article https://debtcamel.co.uk/how-to-complain-guarantor-loan/ has a template letter you can use. It has got sentences you can delete or change so they are right for you. There is a sentence in saying that you have a gambling problem – that helps explain your case. Do send copies of your bank statements as they show what the lender should have seen but didn’t bother to ask for.
I’m terrified that I will be sent away for using the money for gambling.
That can never happen! It is the lender who is at fault for not looking carefully at your situation and seeing you had a gambling problem.
Sara (Debt Camel) says
You can also make complaints about payday loans. It is worth complaining to any payday lender you used more then twice – and to any lender where you only took one or two loans if they were big loans. See https://debtcamel.co.uk/payday-loan-refunds/ which has a different letter for payday loans.
This may feel like a lot to do, but after you have sent the first complaint off you will see it is so easy to just change it and send it to another payday lender.
I have written an article on gambling and payday loans, which shows how the Financial Ombudsman looks at cases like yours: https://debtcamel.co.uk/gambling-payday-loan-refunds/.
Reen says
I have complained on the 28th of October and chased last week and today and no one got back to me. It’s absolutely outrageous. Even forwarded the email to the CEO. I am giving them until the end of today and then filing straight with the Ombudsman as Amigo Loans seems to be messing with me. My partner also filed a complaint so hopefully we can resolve both of them in one go.
Martin says
Posted complaint 12 weeks ago. Amigo did ask for 4 extra weeks which ran out yesterday. I used the template on debt camel to raise the complaint but could do with some help with raising the complaint to FOS.
Sara (Debt Camel) says
Hi Martin, the main page for guarantor complaints is this one https://debtcamel.co.uk/how-to-complain-guarantor-loan/. Read the Taking a complaint to the Ombudsman section on that page.
Martin says
Ok thanks a lot
David says
Hi. I have a case of due diligence but also wondering if the fact my brother convinced me to take the loan out as it would help him with his other debts would help me with my complaint? I was young and didn’t completely understand what the consequences would be.. thanks
Sara (Debt Camel) says
I think that is unlikely to help your case unless you think Amigo should have been able to tell that you were being coerced into taking out the debt… and it doesn’t sound as though that is the case.
David says
Thanks for the quick reply.. also another thing is if my status as guarantor is removed.. can I also ask for a CCJ to be removed from my credit file?
Sara (Debt Camel) says
Yes! You should ask to be removed as guarantor, for any payments to be refunded to you plus 8% and for the CCJ to be “set aside”.
David milne says
Thanks again. Sorry but one more thing.. if the FOS refuse my complaint. Am I able to try again in the future? Thanks
Sara (Debt Camel) says
No! So far people have been getting very good results from FOS, but if you get an adjudicator decision you don’t think is right, you need to go back and asrgue against it. And ask for the complete go to the second “Ombudsman” level if necessary. Don’t give up and let a complaint drop as you can’t start a new one later.
Ash says
Hi,
Just after some advice,
I’ve read this page and sent off a complaint to amigos about 2 loans taken out and 2 top ups. They are looking it at and have sent me a questionnaire asking. Asking this-
Did I know it was unaffordable at the time.
Yes or no
If you say no it asks when you knew it was unaffordable.
Then asksif your income was correct.
Yes or no
Then if the expenditure was correct.
Yes or no
If you put no it asks why, with option saying you reduced outgoings to get the loan or other, then you can add a comment.
I’m a bit unsure about how to reply, just feels like they are trying to trip me up or something.
So do I just fill it in to the best of my knowledge.
With thanks.
Ash
paul says
I’ve got the same questionnaire back, what did you do in the end?
Sara (Debt Camel) says
Hi Paul, have you sent Amigo your bank statements?
If you have the best answer is probably to reply ignoring their questions but to say “I have sent you my bank statements so you can see what my situation was.” They are just trying to make you feel guilty and not acknowledging that the lender should have checked carefully that the loan was affordable.
Lee Vans says
I too have logged an affordability complaint with Amigo, they topped up six times within a short period of time while never requesting bank statements from me. I’ve lived in my overdraft for 8 years and I’ve sunk further and further into debt. I’ve entered into a debt management plan and I’m just waiting to hear back from Amigo regarding the outcome. They’ve been very communicative so far and detailed that’s there’s been a delay so can’t fault them there.
I shall provide an update regarding the outcome.
Lauren says
Hello, I’m writing a complaint today, however I no longer have the bank details from when I started my loan, due to changing banks and having no records anymore. Will I still stand a chance? My online banking wont let me go that far back either, to show changes to income etc as time has gone on, so will this be a struggle? I don’t want to be fobbed off because of this. I can show now that my bank literally has my income and expenditure and going from money to in overdraft each month, and not being able to pay things like council tax and struggling for much else. Thank you
Sara (Debt Camel) says
Bank statements make it easier but it is still worth complaining.
how long ago did this loan start?
shereen says
hi amigo agreed to pay compensate me and askd for bank account details now thy want bank statement to prove who iam um don’t understand thanks jessy
Sara (Debt Camel) says
Well you wouldn’t want them to pay your money into the wrong person’s account, would you!
They are making a bit of a meal of these payments, but I suggest you send them what they have asked for.
James says
Hi,
I’m currently going through this process with Amigo now. Using resolver and the amazing advice on here!
I took out a loan of £5,000 and later topped this up to £7,000. At this point I was repaying £287 per month on a £1000 a month wage. I had 8 payday lenders at the time and £3,000 in credit card debt.
I honestly thought this would help consolidate my debts and instead it just worsened and meant I had even more debt and a longer span to repay it all. Honestly wish I knew back then what I know now and I’d have never taken the loan and top up out with Amigo!
As such I ended up defaulting with my other lenders as I had to make sure this one was paid as it was covered by a guarantor.
3 weeks in and so far Amigo have been good on the communication front, I’ll keep you updated. This loan was from 2014.
Sara (Debt Camel) says
COMMENTS ON THIS ARTICLE ARE NOW CLOSED.
The best place for comments about Amigo loans if you are the borrower is https://debtcamel.co.uk/how-to-complain-guarantor-loan/