The Financial Ombudsman (FOS) has recently published two important decisions about guarantor loans, one where a borrower complained and one where the guarantor complained.
I have covered the borrower case here: Ombudsman – Amigo did not check properly that a borrower could afford the loan.
This article looks at the FOS decision about the guarantor for a loan. I have selected points from the decision which may be useful for other people wanting to make a complaint that they should never have been accepted as the guarantor. I have used italics for quotes from the decision, the rest is my paraphrasing.
The Ombudsman found:
- Amigo had not checked properly that Miss W could afford the loan and that better checks would have shown that she couldn’t;
- the loan had not been correctly described to her before she agreed to it;
- Amigo had treated Miss W poorly when trying collect money from her, not taking account of her mental health problems.
So the Ombudsman ordered that:
- Miss W should be removed as the guarantor;
- any payments she had made should be refunded; and
- she should be given £500 compensation.
Contents
The Ombudsman’s 4 key questions
In a normal affordability complaint, FOS looks at whether the lender made sure the borrower could afford the loan and, if the lender didn’t check properly, what thorough checks would have shown.
But the position of a guarantor is more complicated. So the Ombudsman said he intended to look at four questions:
- did Amigo complete reasonable checks that the borrower could repay the loan in a sustainable way? if not, would better checks have shown that the borrower could afford the loan?
- did Amigo obtain Miss W’s properly informed consent before setting up the loan with her as the guarantor?
- did Amigo complete reasonable checks that Miss W could repay the loan if the borrower did not? if not, would better checks have shown that Miss W could afford this?
- did Amigo act unfairly in some other way?
1. Could the borrower afford the loan?
If the loan was not affordable for the borrower, the lender should never have made the loan at all.
In Miss W’s case, this was difficult to assess, as the Ombudsman said:
as the borrower wasn’t a party to this complaint, I didn’t have any evidence of the checks that Amigo carried out, or the depth that they went into, before it agreed to lend to the borrower. But the lack of information from both Amigo and the borrower on this matter didn’t lessen the problem, as Amigo was seeking to enforce the guarantee and indemnity agreement. And Miss W says she should never have been accepted as a guarantor in the first place.
The Ombudsman pointed out that the borrower had made very few payments and Amigo was seeking to enforce the guarantee:
both of these factors were indications that the monthly loan payments may have been unaffordable for the borrower in the first place.
Amigo replied that the borrower had called to say there had been a significant change in his circumstances.
The Ombudsman decided he didn’t have to make a decision on this point as he was going to uphold Miss W’s complaint for other reasons.
But it seems to me that arguing the loan was unaffordable for the borrower could be a good approach for guarantors who are themselves able to afford the loan repayments.
2. Was the loan explained properly?
Guarantor loans are unusual contracts. They are a long term commitment to potentially pay a lot of money where the guarantor derives no benefit from the loan at all. So they need to be clearly explained to the guarantor.
The Ombudsman said:
the rules and regulations in place at the time Amigo sought to bind Miss W to the guarantee and indemnity agreement required it to obtain her properly informed consent before doing so. And it had to do this by getting Miss W’s agreement to the guarantee after having provided her with an adequate explanation of the circumstances in which the guarantee and/or indemnity might be called upon and what the implications of the guarantee being called upon would be.
How large was the loan?
There was a major problem with the phone call between Amigo and Miss W that may not often apply in other cases.
The borrower originally had a different guarantor, then wanted a top-up and the original guarantor refused. Miss W became the guarantor for the new loan of £5,750, most of which settled the previous loan, with only £1,039 being paid to the borrower as the top-up.
But in the phone call with Miss W, the Ombudsman found there was no reference to the total loan amount, only to the top-up amount.
Amigo argued that the Terms of the Agreement were clear and Miss W had confirmed that she had read, understood and accepted them. The Ombudsman didn’t think this was sufficient:
it seemed to me that the purpose of the pre-payout call was to obtain Miss W’s informed consent to being the guarantor on this loan… I didn’t see how Amigo could fairly and reasonably seek to correct an omission in the information it provided on the call with information it provided through another medium. Equally I didn’t think it was fair and reasonable to expect Miss W to have picked out the relevant parts of different communications and piece them together to get an idea of her obligations, when it was Amigo’s responsibility to provide an adequate explanation of them.
Were the implications of a guarantor loan adequately explained?
The Ombudsman mentioned other problems with the way Amigo had explained the guarantor loan to Miss W.
Miss W had been asked if she had read the Terms of Agreement and if she was the person who had signed online agreeing to be the guarantor. But the Ombudsman pointed out Miss W had not been asked if she understood the terms.
The Ombudsman also said that in the phone call:
- there was no explanation of a guarantor only having to pay if a Default Notice had been issued to the borrower;
- although there was a reference to charging orders and attachment of earnings, these terms were not explained; and
- there had only been a suggestion that Miss W should seek advice from Citizens Advice, not from a legal professional.
Overall the Ombudsman concluded:
bearing in mind the potential implications Amigo itself foresaw, the seriousness of them and its failure to fairly and reasonably use what I considered to be plain and intelligible language, I didn’t think that Amigo provided an adequate explanation about the circumstances in which the guarantee might be called on and what the implications of this might be to Miss W.
I don’t know if this on its own would have been sufficient for Miss W to win her complaint. There was so much else wrong in her case! But I think some of these points could be helpful to other people making complaints, especially if their phone call with the lender was brief, hurried, or they had showed any signs of not really understanding their own finances, which would suggest they may not understand the details of a guarantor loan.
3. Could Miss W afford to repay the loan?
The Ombudsman said that:
Amigo had to reasonably conclude that making the payments to the loan, in the event she had to, wouldn’t cause Miss W undue difficulty or adverse consequences. In other words, it wasn’t enough for Amigo to simply think about the likelihood of it getting its money back, it had to consider the impact of loan repayments on Miss W.
And he outlined the standard FOS approach to looking at what a reasonable check is, saying it has to be more thorough the lower a customer’s income is, the higher the amount to be repaid, the longer the term of the loan and the larger the number of loans the lender had previously given the customer.
The Ombudsman said:
I thought that Amigo simply accepted the information provided [in the questionnaire by Miss W] without question and without any attempt to scrutinise or evaluate it. I thought this was the case because Miss W was recorded as having a monthly income of £3.000 even though she was also recorded as having been employed as a Senior Healthcare Assistant.
I didn’t think that it was impossible for Miss W to have had a monthly income of this amount in the job she had. But given the declared income was substantially above the average for an individual in this line of work, I thought that it would have been reasonable and proportionate for Amigo to have taken steps to have verified the monthly income it was provided with in this case.
I also explained that I thought it would still be sensible and proportionate to verify, at least, employment status and income irrespective of whether the declared figure was wholly out of kilter.
There didn’t appear to have been any scrutiny of the rest of the information included on the questionnaire either. For example, I hadn’t seen anything to suggest that Miss W’s rent declaration was verified. And I was also concerned at the fact that Miss W didn’t appear to have been asked about her existing monthly credit commitments either.
Amigo said it was entitled to rely on the information Miss W provided within the questionnaire and that there was no rule dictating that a creditor must request proof of income or expenses before paying out a loan, quoting an FCA document saying “the lender must make a reasonable assessment in the individual case but we do not dictate how this must be done”. And that it completed a number of checks on the income and expenditure assessment to ensure the figures provided were realistic, eg by comparing expenses to the national average.
But the Ombudsman went into detail about when less and more detailed checks are likely to be needed, concluding that:
I want to be clear in saying that given the particular circumstances in this case – the term of the loan, the total charge for the credit and Amigo seeing charging and/or attachment of earnings orders as a reasonably foreseeable consequence of Miss W not meeting her obligations – I think that it would have been fair, reasonable and proportionate to ascertain Miss W’s actual financial position before accepting that she could make the payments in the event she had to.
He also pointed out the Amigo’s own website says a guarantor has to have a good credit record if they are not a homeowner, but she had a default and was only making minimum payments to her credit card:
it seems to me that Miss W didn’t meet Amigo’s own stated criteria for being a guarantor. And, in these circumstances, I can’t see how it was fair, reasonable or proportionate to accept her as a guarantor without asking her to provide evidence of her income and expenditure, rather than outsourcing this to a CRA.
The Ombudsman then looked at what proper checks would have found:
- Miss W’s income was erratic and substantially less than she had put on the questionnaire;
- she had nowhere near enough income to be able to make the payments for this loan for one month, after taking her actual expenses and credit repayments into account.
4. Was there any other unfair treatment?
The Ombudsman found that Miss W was likely to have been suffering from a mental health condition for several years, including at the time she agreed to be the guarantor for the loan.
He didn’t think there was anything in the phone call with Amigo before the loan was approved that would have alerted Amigo to Mis W’s mental health problem, so this wasn’t relevant to whether Amigo made a fair decision to accept her as a guarantor.
But the Ombudsman did think her mental health was relevant to Amigo’s debt collection process, by which time Miss W had told Amigo about it in her complaint.
Amigo said it had asked Miss W to complete a DMHEF form – which gives evidence from her doctor or another medical professional about her mental health – but she hadn’t done this. And it just followed its normal procedures in referring her to its pre-litigation team.
The Ombudsman pointed out Amigo had seen other medical evidence about Miss W’s health and this meant it was unfair to utilise its standard prelitigation procedure and threaten court action.
So the answers to the 4 key questions were…
- did Amigo complete reasonable checks that the borrower would be able to repay this loan in a sustainable way? not determined
if not, would better checks have shown the borrower could afford the loan? not determined - did Amigo obtain Miss W’s properly informed consent before setting her up as the guarantor? NO
- did Amigo complete reasonable checks that Miss W could repay the loan in the event the borrower did not? NO
if not, would better checks have shown that Miss W would have been able to do so? NO - did Amigo act unfairly in some other way? YES – Amigo did not take into account her mental health problems during debt collection.
Because of (2) and (3), Miss W was removed as guarantor and any payments she had made to the loan had to be refunded.
It is worth pointing out that Miss W would have won her complaint and been removed as guarantor if either the answer to (2) had been NO or the answers to (3) had been NO and NO.
Because of (4), she was awarded compensation of £500.
How to complain about a guarantor loan from any lender
If you should not have been accepted as a guarantor or have been given a loan if you were the borrower, there are two pages which can help:
- for guarantors: How to complain when you are the guarantor for a loan
- for borrowers: How to complain if you have got a guarantor loan and you are the borrower.
Those pages are the best places for comments and questions about these complaints.
SHW says
I recently had my guarantor loan with George Banco written off by the FOS. This was after your advice Sara so I am eternally grateful. I started this complaint in August last year, it took 9 long months as George Banco kicked their heels and didn’t agree to anything and in the end it had to go an ombudsman but it was found in my favour and I ended up getting over £2000 back. I will never ever take out a loan like this again. I am sure there are lots of others who were sold these loans incorrectly and I am glad I persevered and never gave up. I encourage anybody else to do the same. Financially I am now much better off and a huge weight has been lifted. It was also good to tell my guarantor that he was free from the loan (not that I ever defaulted even while this case was going on). Please take these companies to the FOS. They are taking a dim view of these and my case was used as an example for future reference and I think set a precedent.
Arlene Huggins says
I got into a lot of debt in the early 1990 – 2005 and I was given loans and credit cards amounting to over £50000 and I wasn’t even working full time.
Went into a dmp with Payplan for about 12 years and still owed 55000.
Now being chased by debt collectors as payplan did not help me when I was off work and could not pay anything
Sara (Debt Camel) says
Are you back in work? Buying or renting?
Arlene Huggins says
Neither
I am 63 and live in a jointly owned house.
I am working only because I am one of the WASPI women and don’t get a pension until I am 66
anonymous says
Hi Sarah, Thanks for this article its been really helpful. My husband was forced into becoming a guarantor for his brothers loan with Amigo. This was due to financial pressure from both his parents and brother. When he accepted he wasn’t fully aware of what it meant to be a guarantor. He’s self employed. we don’t think Amigo should have given the loan to his brother as at the time he was in arrears and behind in payments for his business. Amigo should have recognised that he was struggling financially. within six months of the loan being taken out i had to start giving the money to him to pay of the loan. He lost his business and also has suffered from other things. (Gambling and Drug addiction) he simply doesn’t care to help us. We want to buy a house and are so scared to miss payments. I really do not think Amigo should have given him the loan as he clearly couldn’t afford it. Nor do i think they made my husband understand what being a guarantor meant and how it could affect his future plans.
We cant work with his brother to put a complaint against Amigo as relationships are strained and we don’t talk. Amigo told us since last year my husband has paid £8000 in repayments. this is due to go on for the next four years.
Is there anything you advise for us to do?
Sara (Debt Camel) says
“This was due to financial pressure from both his parents and brother” can you say what sort of financial pressure this was? Or did you mean emotional pressure?
And was your husband self employed or his brother (or both?)
anonymous says
It was emotional and financial pressure from both his brother and parents. His brother was “going through a bad phase” and he was using his parents to pressurise my husband into “helping him out”. It was made very clear to my husband that if he didn’t we wouldn’t be able to continue living with his parents and would have to move out and also this would cause a massive break up in the family. His brother has since borrowed money from us which we wont ever see again and stolen other belongings of mine given to me by my parents. My husband is self employed and so was his brother at the time. However his brother has lost the shop completely in 2018 (the loan was taken out in 2017) so you can see that finances went downhill quickly. my husband was 23 at the time and didn’t know what being a guarantor meant and states he didn’t sign the agreement his brother did. His brother played down exactly what he was asking of my husband. is this worth mentioning in the complaint? we’ve been through hell and just want to dissasociate from this loan so we can move on with our lives
Sara (Debt Camel) says
“signing the agreement” would have been online.
23 and self employed – Amigo should have looked very closely into his finances to check the loan would be affordable. Did you husband have to produce self employed accounts? What was his credit record like at the time, did he have other debts?
anonymous says
Thats why we have requested a SAR as my husband said he didn’t remember signing anything. they’ve provided a CD but no application.
we are waiting for the password for the CD We think his brother signed the agreement. no my husband didn’t produce any other supporting information. He states they ran a credit check and that was enough so he was placed as the guarantor. His credit wouldn’t have been bad. He kept direct debits low. (£15 monthly gym fee) he was also paying money towards a sofa for his mum. however i’m not sure how much this was. Do you think we have a case against Amigo? we just don’t think they looked into his brothers finances properly or explained what being a guarantor would mean for my husband.
Linda says
I got a guarantor loan with amigo what would I have to do and say
Sara (Debt Camel) says
Are you the borrower or the guarantor? There are different template letters…
Robert says
Omg I can’t believe I have just seen this!I think I may actually have a Chance of having a case against amigo.So in March 17 my mate asked me to be a guarantor I was unsure at first but I went along with it due to him being in long term work but had no idea how bad his credit rating really was .However I wasn’t working at the time in fact I was just a university student ,my only income was a student loan/bursery from the uni,so not really income.He wanted £3,000 to clear some outstanding payments and to go on holiday.He agreed to lend give me £400 out of the money just for doing him a favour.Anyway amigo didn’t ask me proof of my earnings of a job so I just made up a job and earnings and they approved the loan,it was almost to easy.I wasn’t a home owner either.Just happened to have a decentish credit score a the tile I reckon .Anyway my mate set up the first payment for May 17 and till August 18 he paid back the instalments a of 146 a month.In between that time he asked me to pay back the £400 which I took from the 3000 as he was struggling to make the payments so I did and more.From then I’ve been covering the cost as he lost his job.So from August 18 to June 19 this year I’ve been paying as his financial situation is dier.I have 12 payments left.I really do not want to keep paying this!
Sara (Debt Camel) says
Can I ask how old you were at the time? (This isn’t as irrelevant as it sounds.)
Also are you still in contact with the borrower or have you fallen out over this?
Anonymous says
Hi,
I stupidly took out a loan with amigo 2017 due to personal pressures. My now ex had a car on finance in my name then lost his job the car people were hassling me for money. I asked my brother to be a guarantor for me he agreed and payments were met with amigo and the car company. Then my boyfriend kicked me out of his house and decided he wasn’t paying anything towards the amigo loan or the car payment, once again the car people were hassling me and I was back at my parents home.
I stupidly decided to top up my loan this time my mother who is a pensioner became my guarantor to help me move out of her bungalow and continue the car payments, since this time the car has gone back but now I have a attachment of earnings for this car.
I’m in more debt and struggling I should not been able to top up my loan if they had done a credit check, I’ve had advice from citizens advice but they couldn’t help me much because of the guarantor loan. I’m keeping the payments up to date but I’m behind with my rent and council tax.
My mother is 70 year old pensioner in a rented bungalow she shouldn’t of been allowed to be the guarantor. I’m so stuck at where to start. Any help is much appreciated.
Sara (Debt Camel) says
I suggest you put in an affordability complaint to Amigo about the original loan and the top up. But you will have to carry on with the payments while this goes through or they will ask your mum.
It doesn’t sound right your mum was accepted as guarantor. It would also be good if your mum could put in a complaint and ask to be removed as the guarantor, see https://debtcamel.co.uk/amigo-complaints-by-guarantor/. Could you help her with this?
stephen says
I am a guarantor for a car loan my ex and I have nothing to do with each other advantage are saying I am liable for the 3125.00 debt I don’t work I asked to be removed as guarantor they said no I did not know what I was signing as I was pushed in to it at the time is there any thing I can do
The lender was advantage car finance.
Sara (Debt Camel) says
who is the car finance lender?
A says
Please can anyone help me, I am guarantor for my husband Amigo Loans, loan is 10K, original was 3k, when they gave him the top up I didn’t realise how much the repayment would be, we have now CCJ because of Amigo loan. yesterday went to court to set aside, because they send court documents to our old address. now they will file again, I called amigo loans to ask to send me contracts, statements and recordings when I agreed for top up, they said they checked my credit file, and because I was given a loan from NatWest bank they thought I could afford to be guarantor.
I am solely responsible for private rent of 1500 per month, all taxes, bills, school lunches, I have credit 2 cards I have to pay back, and 4 loans I pay £1000 per month for loans, monthly food spending, basically everything. my husband on very low paid odd jobs under 1k per month.
do you think I have a case against Amigo?
many thanks in advance,
Louise says
My Dad is a guarantor for my brother, my dads only source of income is his disability allowance and his pension, my brother pressured our dad into agreeing to become a guarantor, Do you think he has a case
Sara (Debt Camel) says
There is no reason in theory why someone on benefits can’t be a guarantor. But in practice they normally have extra costs associated with their disability – perhaps your dad needs extra heating, or frequent laundry, or he has to pay for help in the house, or he has extra parking and transport costs etc. All too often a lener – is this Amigo? – hasn’t properly taken these into account. So although it may have looked as though your dad had a lot of money coming in, if the lender has looked closely, it would have been clear that he couldn’t afford the loan repayments.
So your dad has two reasons to complain and ask to be removed as the guarantor. First that he was pressured into saying yes – this may be difficult to “prove” but he should just say what happened. And second that he actually couldn’t afford the loan.
And there may be a third reason if it was obvious that your brother couldn’t afford the loan either!
There is a template letter to make this sort of complaint over here: https://debtcamel.co.uk/amigo-complaints-by-guarantor/. perhaps you could help him with this?
Is your dad currently having to make any payments to this loan?
Leigh says
Can Amigo Give You A Loan While On Esa An Child Tax Credits Loan Was Taking Out 2016 Still Paying and Cos It’s Payments Are Unafordable They Have Added An Extra 5 Years On The Account It Was Originally Taking Out For My Ex In My Name An I’m Left To Pay We Was On A Joint ESA Claim
Sara (Debt Camel) says
Hi Leigh,
Can I check I have understood this – your ex took the loan from Amigo and you were the guarantor? And you ex has stopped paying so now you have to?
Assel says
Hi Sara,
I would be very grateful if you could help me, my husband took a loan fro Amigo initially for £3000 with repayments of £146 per month, then they offered topup loan to him for total £10000 with monthly payments of £484, i agreed to be guarantor, he was between the jobs and self employed, odd jobs, when they initially gave him first loan he wasn’t even working. I checked statement from amigo loans he repaid back £8127.06 so far. 3 payment for total £2000 were paid by me as he couldn’t pay those months. Interest rate is charged at 49.9% per annum.
Total payable with interest is £14990.
£14,990 – £8127.06 = £6862.94 is to be paid to Amigo as I understand, when he lost his job, the used stepchange to pay minimum payments, but before he offered Amigo £250 per month, but the refused it several times.
Now we both have CCJ, because Amigo took us to court, I am solely responsible for family expenses all rent, taxes, food, school meals, clothes, etc. also have my own loans and credit cards to pay,
Please let me know if I should file a complaint to FO?
also i would like to file a defense in court to agreeing only to £6862 to pay amigo loans. Not sure what to do.
Assel says
Hi Sara,
I forgot, Amigo claiming we have to pay them £9550, but even on their online statement the total outstanding is £9365.
Sara (Debt Camel) says
Hi Assel,
you both probably have very good reasons to complain.
£3,000 is a big loan and £10,000 is a HUGE loan to offer someone unless they have a good and steady income so they should not have given him the loans.
And when Amigo considered you as his guarantor, they should have realised that if he was having trouble paying, then you may have pay all the household expenses, so you couldn’t afford it either.
Can I ask if you both already have CCJs from Amigo? Or has Amigo just started these court cases?
Assel says
Hi Sara,
yes, now both have CCJ due to Amigo, we had a set aside judgement from court, because Amigo sent us first court letters to previous address, but now county court asking us to file full defense with court and to serve a copy to claimant.
I a not sure if its worth complaining to FO and ask court to stop until we hear back from FO?
Thank you,
Assel
Sara (Debt Camel) says
You can’t go to the Financial Ombudsman before you have complained to Amigo and allowed them 8 weeks to reply.
It is possible that Amigo may uphold your complaint and discontinue the court case. But if you have a deadline to file a defence, that is what you need to do… I suggest you need to file a defence and ask the court to stay the case pending resolution of your complaint with Amigo and, if necessary, with the Financial Ombudsman.
How long do you have to file this defence?
You should both get complaints into Amigo as soon as possible. A template letter for your husband here https://debtcamel.co.uk/how-to-complain-guarantor-loan/. And a slightly different one for you here: https://debtcamel.co.uk/amigo-complaints-by-guarantor/
Assel says
Dear Sara,
Thank you so much for your help.
Will do as you advised.
Best,Assel
Sara (Debt Camel) says
I can’t help with what to put on court forms. If you need help with this defence I normally suggest going to your local Citizens Advice – they can get help from the national Specialist Debt Advice Service if necessary. But it may take a few days to get an appointment and if your defence needs to be in in a few days, then two other places you could try are:
– National Debtline on 0808 808 4000
– the Legal Beagles forum https://legalbeagles.info/forums/forum/legal-forums/court-claims-and-issues
Assel says
Dear Sara,
Unfortunately I was to quick to feel positive, today Amigo Loans send me an email saying there will be defence heard in court and we can discuss about CCJ to set aside. But Amigo send me an email just yesterday saying they’ve agreed to let my husband to pay lower monthly payments.
also Amigo posted me records of conversations with me and all documentations regarding the loan. so I am waiting. they haven’t responded to me regarding the Complaint about Affordability yet.
I am not sure if I still should go to FOS.
Sara (Debt Camel) says
As I said, I can’t advise you on what to put on court forms. And you can’t go to FOS until the 8 weeks from your complaint has passed.
If you win your complaint it is VERY likely that a CCJ would be set aside.
Assel says
Dear Sara, thank you very much for your advice, we raised complaint with Amigo, and today they texted me that they agreed to lower monthly payments.
I am just not sure if they remove CCJ from our files.
They should have agreed to lower payments in the first place.
So upsetting I couldn’t sleep for 2 months worrying about this.
Assel says
Dear Sara,
Thank you for your reply. we did submit our defence and direction questionnaires, I really hope to hear back from Amigo regarding the complaint we submitted. as this time they agreed to lower monthly payments, hopefully this situation will be revolved in court.
I am very grateful for your advice and support.
Best,
Assel
Sara (Debt Camel) says
You want your complain directly resolved with Amigo or then by FOS. You don’t want to have to try to win in court. You need to try to get the court case stayed pending a FOS decision.
Assel says
we did call the court also sent them an email to put this on hold until we hear back from FOS, they said it does not appear as though there are any upcoming hearings in the case to adjourn. its a bit confusing, then court send an email saying this was referred to the judge and judge will let us know the date.
but from last email from AMIGO they want to go court, although accepted lower payments. I don’t really understand
Sara (Debt Camel) says
You need help with this. Go to your local Citizens Advice.
Stephen says
Hi Sarah
Basically, i took the loan out with AMIGO AND GEORGE BANCO – it was a mistake on my part but i was simply desperate. my friend is the gaurantor for me on both loans and they were made aware of this.
I was in no position to pay back and have many defaults on my credit history. They knew this as they had asked me. I am not trying to get out of the loan but would like my gaurantor off it and to see if there was anything i can do in order to reduce the interest?
Sara (Debt Camel) says
Did you take both these loans out at the same time? How long ago?
Can you say what the rest of your financial situation is like apart from these loans? Do you have other high cost credit? Debts you aren’t repaying? If you were to get your guarantor removed, could you afford to repay these loans over a longer period or do you really need to be looking at bankruptcy (or a debt relief order if your debts are under 20k)?
What is your guarantor’s Financial position like, could he really afford the repayments orcan he too argue that they are unaffordable for him?
These questions may sound odd but I’m asking to see if it better for him or you to make the complaint.
stephen says
Yes they were all within a week or each other. 6 months ago and every month has been a complete struggle and late payments.
I have these two loans plus in rent financial difficulty.
He is unable to pay the monthly cost, as i thought i would be able to find a way but cant. i am surprised it got approved anyway, especially as they were told my gaurantor was already a gaurantor on another loan for me and my credit rating is incredibly low.
Sara (Debt Camel) says
ok, so he can make two complaints that he should not have been accepted as a guarantor as he could not afford the repayments – template letter for him to use is here: https://debtcamel.co.uk/amigo-complaints-by-guarantor/. He then has two chances to win of he wins his complaint or you win yours.
And you can complain that you cannot afford the repayments – a different template for the borrower is here: https://debtcamel.co.uk/how-to-complain-guarantor-loan/
Both your cases against the second lender (who was that?) are very strong if they were told you had just taken out another guarantor loan with the same lender.
Do you have other problem debts? Are you paying those debts?
stephen says
when you say he has two complaints what do you mean by that? What is it that he is able to argue?
Also what is likely to happen if we are succesful?
I will complain also – will they not just say it was my decision to take the loan out and therefore nothing they can do?
Second lender was George Banco
Yes big problems paying the debt and every month i can no longer afford.
What should i ask them for when complaining?
Sara (Debt Camel) says
Sorry, I meant a complaint against each lender.
If he wins his complaint, hw will be released as guarantor. For you this means the loan becomes a normal loan, you can make a payment arrangement, put it in a debt management plan, go bankrupt or have a debt relief order and he will no longer be affected.
If you win your complaint the interest is removed from your balance so you only have to repay what you borrowed. AND he is released as guarantor. So again you can makes payment arrangement etc.
If the lender rejects your complaint, send it straight to the Ombudsman. Lenders have a duty to check that a loan is affordable, they can’t just say you asked for it and they should be aware that desperate people may not have thought clearly about if they could afford the repayments.
Use the template letters, each of them says what you should be asking for. Also change them so that they reflect your case – so for the George Banco ones, say that you had told them you had very recently taken an Amigo loan and that should have made them look very closely at whether thus new loan would be affordable.
Sara (Debt Camel) says
The question is whether you should continue to pay the loans if it is causing you a lot of hardship. These complaints can take many months if they have to go to the Ombudsman. Do you have other problem loans that you are paying?
If you stop paying, or reduce your payments to a more affordable amount, your guarantor will be asked to pay. But if he too has a complaint in, the lender can’t take him to court until the complaint is resolved, including at the Ombudsman if that is necessary.
Julie Simpson says
Amigo Loans v Hafiza Abbas is an interesting case. The guarantor defeated Amigo loans in court. It was a case dealt with by Mr Sasha Charles widely reported by Landlord Advice UK and The British Landlords Association.
Sara (Debt Camel) says
Without seeing the judgment it is hard to say how interesting it is.
In any case:
1) it is an old case. The agreement must have been in 2015 or earlier. If there was any defect in the documentation Amigo are likely to have corrected it for recent loans.
2) it’s a county court decision so it isn’t a precedent for other court cases.
3) the main aim of people making affordability complaints is not to have to go to court! But to get the case decided by FOS who is upholding a very large number of complaints against Amigo by borrowers and guarantors. So far Amigo has not started a court case against anyone with an affordability complaint in progress. If a case is already underway by the time the guarantor finds out what an affordability complaint is, the advice is to get the court case stayed so that the complaint can be settled through FOS.