UPDATE: FCA fines TFS £880,000.
On 10 June 2022, the FCA announced:
TFS Loans Ltd (in administration) has been fined £811,900 by the Financial Conduct Authority (FCA) in relation to deficient affordability checks on 3,150 guarantors in its consumer credit business. The FCA has also imposed a requirement on TFS to redress the guarantors that were harmed by the firm not conducting appropriate checks.
This fine relates to some loans given between 2015 and 2018.
As TF is in administration, customers with complaints are waiting to see how their complaints will be decided and how much compensation they will get. The FCA has agreed that the fine will only be paid to the FCA if customers are repaid in full, so it won’t reduce the payments customers will get.
TFS Loans Ltd went into administration on 8 February 2022.
TFS was a small guarantor lender. This is the second guarantor lender to go into administration. Buddy Loans went into administration last year. Most of the larger lenders in the market are no longer offering guarantor loans, including Amigo, George Banco, TrustTwo and UKCredit.
TFS loans were pretty typical of the UK guarantor loan market – between £3,000 and £15,000 lent on a 1-5 year term at between 30% and 70% interest, with a representative APR of 39.9%. The FCA describes these loans as “high cost”.
TFS Loans Ltd’s Full Accounts for 2020 were published in December 2021. They said:
- TFS stopped making guarantor loans in March 2020;
- during 2020 TFS received increasing numbers of affordability complaints
- a debt restructuring was being proposed
- the company employed 25 staff.
The audit opinion was “qualified” – that means roughly that the auditors were not confident about the future. The auditors said::
“the ability of the company to continue in operational existence is dependent on the continued support of the company’s creditors and the full agreement of the proposed restructuring deal, without which the company may not be able to continue as a going concern.”
Several Debt Camel readers have had problems being paid in the last few weeks by TFS, so their collapse into administration is not a surprise. This article looks at the implications for them and for all other TFS customers.
Contents
Affordability complaints against TFS
The TFS website said:
A guarantor loan is an alternative way of lending that can provide you with an affordable loan for any purpose…. The loan is based on trust instead of your credit score.
But having a guarantor does not mean that loan can be given that is unaffordable for the borrower. The regulator’s rules say a lender should assess whether a guarantor loan is affordable for both the borrower and the guarantor.
Here are a couple of recent Financial Ombudsman (FOS) decisions against TFS:
- Ms B had had several CCJs and defaults which though not recent were unpaid, TFS did not try to verify her expenses – if they had they would have seen she was gambling regularly;
- Mr L took two loans from TFS. The first was taken only a few months after a recent default and a CCJ. The second loan, to refinance the first and consolidate other debt was taken only a year later after his debts had continued to increase.
Reading FOS decisions, it seems that in some cases TFS lent on the basis that the borrower had an apparently high disposable income, but the Ombudsman pointed out that was not compatible with what the borrower’s recent credit history showed.
What happens in administration
It is the administrators’ role to sell the assets of a company and divide the available money between the company’s creditors. This distribution can take a long time – often more than a year.
The administrators have now published their proposals for the administration.
Anyone who is owed money by a company that goes into administration can make a claim to the administrators. At the moment you can send a complaint by email to complaints@tfsloans.co.uk. The administrators may later put up a page to let people make complaints.
In this case, that includes TFS customers, past and present, borrowers and guarantors. They could all be creditors because they may have a claim against TFS for unaffordable lending.
The FCA has asked the administrators to devise a methodology to work out which customers who were mis-sold loan.
There will not be enough money to repay all the complaints in full in the administration:
- all unsecured creditors who are owed a cash refund get a “pence in the pound” amount that divides up the money the administrators have available.
- this amount can vary from nothing (Uncle Buck), very little (Sunny – 3p in the £), OKish (Swift Sterling 20p in the £) to pretty good (QuickQuid 53p in the £).
- borrowers with an existing loan get the “balance reduction” part in full. Say you owe £1200 and your refund is calculated at £2000. Your balance will be cleared and you will get a small “pence in the pound” amount of the remaining £800 refund.
Current loans
The loans still exist even though TFS has gone under
Current loans still exist on the same terms. You are not expected to pay the full amount immediately.
The administrators may want to sell the current loans to a debt collector. But they may well wait to sell the loans until claims for unaffordable lending have been determined.
Most debt collectors are a LOT nicer to deal with than most guarantor lenders! And the debt collector will not expect you to repay the full amount immediately.
Should you carry on paying?
The administrators say:
It is important that all customers continue to repay their loans in accordance with the terms of their agreements, as maintaining payments can have a positive impact on your credit score.
But what if you can’t afford to do this?
But if you can’t afford these payments, you may feel that getting behind with other debts in order to pay TFS is not a good idea and it would be better to stop paying TFS.
If the borrower wants to stop paying then the guarantor also needs to decide whether to stop any payments being taken from their account.
To talk your situation through with a debt adviser, borrowers and guarantors can phone National Debtline on 0808 808 4000. You need to talk to your guarantor about this and explain your situation. You and/or your guarantor may be able to make claims to the administrators. If either of you wins that, your guarantor is be released and this just becomes a normal loan for the borrower.
And what if you don’t want to pay more because you think you have a good affordability complaint and you have already repaid more than the amount borrowed? The administrators say that all payments made after the administration date in February will be refunded in full if your claim is upheld and you have already paid more than the amount you borrowed.
Current complaints
The Financial Ombudsman will no longer work on TFS complaints and has returned them to the administrators to handle.
If you have a final decision from an Ombudsman
Now TFS is in administration you will not get paid the cash refund you should have had in full. You are just another unsecured creditor.
The administrators should accept the FOS decision as a claim from you. They should not look to reopen the case and decide what you should get.
Any remaining balance on your loan should now be written off – you should not be asked to continue making payments.
If you have an adjudicator decision TFS has accepted but not paid out
Here too the administrators are likely to accept this decision as a claim from you.
I don’t think many people are in this situation as recently TFS seems to have been rejecting all adjudicator decisions.
If you have an adjudicator decision that TFS rejected
These will have been waiting at FOS for an Ombudsman decision that is not now going to be made.
The administrators will have to decide whether to accept these as decided claims or to assess your claim and whether it should be upheld.
In some cases, TFS had agreed to freeze the account waiting for the ombudsman’s decision, so not asking the borrower or guarantor to pay. I think if you are in this situation and TFS now asks you to start paying, you should make a complaint to the administrators. I hope this won’t happen and the freeze will just continue until your claim is decided by the administrators.
Keep up to date with what is happening
Look out for an email from the administrators or TFS customer services. These emails may go into your spam/junk folders.
This page will be kept updated.
The comments below are a good place to see what other TFS customers are thinking and whether they have been told anything by the administrators.
Sonia says
I’ve got two guarantor loans one from TFS loans and Amigo I wrote to them explaining that I cannot afford to make payments and they threaten me with going to my guarantor! I then went to the financial ombudsman and they managed to get my monthly repayments lower but I had to fight the companies to except this! I went through hell with them both! What do I do now? Do I send a copy of my letter to the company?
Sara (Debt Camel) says
So you had a FOS decision on your TFS case? What was this?
Sonia says
No they thought TFS loans did not harass me and liaised with them to extend the term of the loan by 18 months to reduce payments for me! I wasn’t happy as I was working part time and had health problems but had no choice but to make a smaller amount each month otherwise they would threaten me to contact my guarantor I’m now retired due to ill health and my pension is paying my loan every month which is leaving me with nothing but extreme hardship.
Sara (Debt Camel) says
was your complaint that the loan was unaffordable when it was given? Or that TFS were harassing you?
Sonia says
I complained about both TFS loans harassed me and my guarantor i had mental health issues due to my ill health and processed the claim for the loan when I wasn’t well I’m still paying this loan back is their anything I can do to get out of this? I’m not working as retired but I’m worried my guarantor will be left to pay it if I inform them I’m not working
Sara (Debt Camel) says
I need to be clear as this may make a big change to your options.
Did you make a complaint that the TFS loan was unaffordable from the begining? Not that it was expensive, or you currently have problems paying it or that their debt collection is unpleasant … but that the loan from the start was unaffordable?
If the answer is YES, what did the Ombudsman decide on that part of your complaint? Did they agree the loan was unaffordable?
Who is your guarantor – a friend, relative… what is their current financial position? what was their financial position when you took the loan?
Sonia says
Sara, please could I email you my letters please x
Sara (Debt Camel) says
No, sorry.
If you need to talk to a debt adviser about your situation, please go to your local Citizens Advice or phone ANtional Debtline on 0808 808 4000
Sonia says
I wrote to both TFS loans and the financial ombudsman to say that I was mis sold and that the loan shouldn’t have been accepted on my low wage also that my health has become worse so I had to reduce my hours at work which meant my wages had dropped also that they harassed both myself and my guarantor for payment even when I explained I was having a bowel cancer surgery. The financial ombudsman said TFS loans said the checks were carried out correctly but they agreed I had been treated unfairly during difficult times and would not add any further interest to my loan and removed arrears handling fee of £100 I owe them £5,000.
My guarantor is my friend and was my work colleague working 20hrs and has a disabled son. I am currently not working because of my health
Also my GP completed a debt and mental health form which was sent to the company but they ignored this. CAB even tried to liaise with TFS Loans but they said they would harass my guarantor for the payment if I was unwell to make any payment
Sara (Debt Camel) says
horrible behaviour. This is why I always say people should not mind if their guarantor loan is sold to a debt collector as they are usually a lot nicer to deal with than guarantor lenders…
But as you lost the Ombudsman case, I don’t know whether you will be able to make a claim to the administrators. They may just dismiss it.
One thing though that is worth trying is getting your guarantor to submit a claim saying the loan was not affordable for her… if she can win this she will be removed as guarantor. Then this is just another loan for you and you can put it into a debt management plan or even go for a debt relief order.
Sonia says
Thank you Sara any help would be appreciated im no longer working and all my money is paying off this loan and Amigo! Same situation! Would they wonder why my guarantor did not write to them in the first place? What should she say? They are not aware I’m not working as I think they would just harass my friend for the payment I’m paying £220 a month which is a lot when your not working. CAB said they cannot help as it’s a guarantor loan any help what I can put in a letter?
Sara (Debt Camel) says
You won’t know for a while if you will be able to make a claim in the administration, it may well be that you can’t.
I think you should talk to your guarantor, and explain she can make a claim to the administrators saying she should be released as guarantor because she could never have afforded to make the loan repayments. But this will take many months to go through. Possibly 6-12 months.
So if you cannot keep paying, you have to explain this to your friend as the administrators are likely to ask her to pay.
Sonia says
Thank you Sara who do we write to? Who are the administrators and should this be done now? Any letter template available for ideas
Sara (Debt Camel) says
Who should your guarantor send a claim to? Email complaints@tfsloans.co.uk
She can read https://debtcamel.co.uk/amigo-complaints-by-guarantor/ which has a template for some ideas but I suggest she keeps her complain quite short at the moment.
Sops says
Do we think they will do a redress scheme like amigo ? I complained and got no where yet had loans with amigo quick quid etc and have had/ waiting on redress , thanks
Sara (Debt Camel) says
No, a redress Scheme like Amigo is very expensive to do, only available to large lenders who have lot of spare money – so much of Amigo’s is going on lawyers trying to get the Scheme through! That was never an option for a small lender like TFS. And it isn’t now they are in administration.
That doesn’t mean necessarily customers get a worse result in administration – in the QuickQuid administration customers look set to get 30-50p in the £ – very possibly more than customers will get in Amigo’s scheme.
L says
Thanks for the lengthy update Sara. Look forward to seeing any updates.
Andy says
Hi Sara , my TFS case was upheld at adjudicator level TFS didn’t not respond to this in the time given with an extension to that time therefore no option but to forward to ombudsman, am I correct in saying this will go bac to administration company an they will now decide wether the findings were correct , I owe still TFS £1500 which is currently frozen but in total Over two loans from £4100
Sara (Debt Camel) says
The administrators may decide to treat all adjudicator decisions as correct or to look at each and decide. I can’t guess what they will do.
AM says
I am in exactly the same position so should we now start paying again, I really do not want to give this company any more money as my possible redress was around £7000 and now likely to be more like £200 if we only get a very small percentage
Sara (Debt Camel) says
I suggest you should wait and see what happens and if they ask you to pay, object on the grounds TFS allowed the debt to be frozen until it was decided by an Ombudsman so you think the administrators should allow the debt to be frozen until it is decided by them.
Sara (Debt Camel) says
did your wife get redundancy money?
How is her job searching going?
do you have a house with equity?
Sonia says
Thanks for all your help Sara I have sent an email to Amigo complaints as well hopefully to get my guarantor removed. Can I just ask I emailed Scheme @ the money shop but the email is incorrect is their any other email address for them?
Sara (Debt Camel) says
that is not the right email for Amigo, it is for the money Shop which no longer exists and was a totally different company.
read https://debtcamel.co.uk/amigo-new-scheme-2/ which looks at the Amigo Scheme. And you cannot make a complaint for your guarantor. You can make a complaint that the loan was unaffordable for you. If it was also unaffordable for the guarantor, they will have to make the complaint. Asl any questions about this on that Amigo page, not here.
Sonia says
Yes my guarantor will do an email to them with the use of the template letter you recommended.
Unfortunately the money shop email address doesn’t seem to work is it because I’m to late at sending them a complaint?
Sara (Debt Camel) says
The money shop scheme has ended. Claims had to be made by April 2020, nearly two years ogo.
AM says
Update from FOS
My adjudicator has just confirmed it is likely that now TFS are in administration my complaint will not be picked up by ombudsman and therefore no final decision on it.
So upheld with adjudicator and then I suppose wil be passed back to administrators.
Should I contact administrators or just wait?
Sara (Debt Camel) says
Just wait. Do you have a current loan?
AM says
Yes but it was put on hold after adjudicator decision waiting for ombudsman to pick up.
I borrowed 7500 and only had a balance of 2000 left. I had paid 303 a month for 48 months. Really do not want to give them anymore as I will not get back my full redress now if it was upheld
Sara (Debt Camel) says
So this is the situation referred to in “If you have an adjudicator decision that TFS rejected” in the article above.
Rachel says
Hi Sarah, I was wondering if you could shed some light on this. I made an unaffordabilty complaint to TFS in November 2020, they replied rejecting my complaint as they stated that I was outside of the 6 year window in order to process my complaint, however my loan was only paid off in 2017. I escalated it to the FOS in December 2020 and in April 2021 the investigator at the FOS agreed in my favour that I had a cause for complaint as I was within 3 years of becoming aware that I could file an irresponsible lending claim. TFS didn’t agree with the investigator’s decision in May 2020, stating that as my loan was paid off in 2017, they believed the 3-year rule started in 2017. This has now been escalated to the Ombudsman for a second opinion of sort. This was done in May 2021, and I’m still waiting for my case to be assigned to a case worker and yet to hear back from them. Now that TFS has gone into administration, what are my options? By the way I’ve only just found out today that TFS have gone bust!
Sara (Debt Camel) says
FOS will return your case to the administrators to decide. You don’t have any other options I am afraid.
Domonique says
I received my email today from the ombudsman saying they can’t deal with my complaint with tfs loans anymore cos they have gone into administration. Its so frustrating as the adjudicator agreed tfs should pay back 2 out of 3 loans. But tfs rejected it. And now I no why. It’s sad that I paid so much money over 6 years. Got into debt. Struggled for years. Which was proven that it was unaffordable. And now I probably won’t even get back what iv paid.
Rich says
If anyone is still following progress on this there’s a proposal from administrators submitted which you can read on company house for tfs under filling history. Makes for an interesting read. I don’t understand the jargon but think they’re about £6m short of full redress but could be wrong. Administration has done quite a lot of work already so hopefully won’t be years in the waiting.
AM says
I am still trying to follow. Not heard from administrators yet about my complaint that was upheld by FOS at adjudicator level.
Mark says
I had a claim the the FOS and TFS both agreed it was miss sold had a date for transfer off funds and they went into administration two days before I was due my payment. I Spoke to TFS after they went into administration who agreed for i don’t have to pay £8,000 balance however they will not remove off my credit score that’s been agreed to be wiped, now it seems I can’t get a mortgage till this is cleared. Any ideas
Sara (Debt Camel) says
There is a procedure you can try to use – ask the credit Reference Agency to “suppress” the record so no lender can see it. See https://debtcamel.co.uk/correct-credit-records-lender-administration/. There it says don’t do this early in an administration. But as you have the FOS decision and TFS’s acceptance, then you can try this now – explain the situation to the DCRa.
I don’t know if this will work but it is worth a try.
Mark says
Thank you I will try this.
Robert says
Im a gurantor and ive been paying for the last three years because the pearson who had the loan wont pay.TFS been trying to take him to court to pay still no joy and he has also thretend me where do i stand on this three or four years this has been going on and no joy
Sara (Debt Camel) says
Are the loan repayments affordable for you?
Sara says
Hi Iv had the same problem with being threatened and no the loan is not affordable to me. What can I do
Sara (Debt Camel) says
you are a guarantor?
Rich says
TFS have now updated credit file to show remainder of loan cleared and account closed so they seem to be working through it now.