Some lenders will only provide a loan to borrowers if another person (for example, a friend or relative) guarantees to make the payments if the borrower doesn’t. The other person is known as a guarantor. So we call this type of lending a ‘guarantor loan’. This page doesn't cover complaints by guarantors of loans to businesses.
We receive complaints about guarantor loans from borrowers and guarantors.
From consumers, we sometimes hear:
We also hear from guarantors, who sometimes say:
The first thing you should do is talk to your lender and explain what's happened and why you're complaining. They need to have the chance to put things right. We only look at complaints that a business has had a chance to look at first, unless both sides agree.
The business should look at the complaint within certain time limits and give you their final response. This will be within eight weeks for most types of complaint.
If you’re not happy with their response, you can bring your complaint to us.
Find out more about how to complain.
If you’re a borrower who wants to complain about your loan, we’ll usually look at whether your lender completed reasonable and proportionate checks before you took out the loan, or whether it has treated you unreasonably or unfairly in some way. When agreeing to your loan, lenders need to make sure you can afford the repayments without too much trouble. So if you’re complaining that your loan is unaffordable, we’d expect a lender to show us what checks they did to make sure you could afford to pay it back.
We’ll look at similar things on behalf of the guarantor too. If you’re a guarantor complaining that you’re unfairly being asked to make loan payments, we’ll usually look at whether the lender:
If we find the business has done something wrong or not treated you fairly, we can tell it what to do to resolve the complaint. T here are a range of things we might ask the business to do to put things right, depending on the circumstances.
Our general approach is that the you should be put back in the position you would have been in if the problem hadn’t happened. We may also ask the business to compensate you for any distress or inconvenience you’ve experienced as a result of the problem.
What we ask a business to do, and the amount of compensation we ask it to pay would depend on the particular facts of the case. The following examples give an idea of our approach:
Or, if there’s still a balance to pay, we’ll ask the lender to:
Sometimes there will still be a balance to pay even after all adjustments. We’ll usually say it is fair for you to pay this back. But there will be some rare instances where we don’t think this is fair. This will depend on what exactly has happened.
We may tell your lender to pay you extra compensation if we think you were caused distress and inconvenience – especially if we find that your lender acted unfairly or unreasonably towards you in some other way.
If we think that the guarantor loan provider unfairly accepted you as a guarantor, then we’ll usually say that you should be released from the guarantee. Any payments you’ve made already should be refunded to you plus 8% simple interest. We’d also usually tell the lender to remove any information added to your credit file. We may tell the lender to pay you extra compensation if we think you were caused distress and inconvenience – especially if we find that the lender acted unfairly or unreasonably towards you in some other way.
Paul and Joe refer their complaint to us after Paul’s lender persistently contacted Joe as the guarantor when Paul couldn’t make the repayments.
If you’re worried about money and finding it difficult to know where to start, the government-backed MoneyHelper service can help you find a way forward. Whether it’s living on a squeezed income, working out how to prioritise your bills and payments, or access to free, expert debt advice, they can help you take the first step towards getting on top of things.
StepChange Debt Charity offers free, flexible debt advice that is based on a comprehensive assessment of your situation and provide practical help and support for however long it’s needed.
If you’re a business looking for information to help you resolve complaints or want to find out more technical information, you can find more detail about guarantor loans in the business section of our website.