Customer Situation: Unfair Guarantor Payments

Claiming a loan refund may seem a little daunting, especially when some of the situations where they have been reclaimed, can seem a like a fairy-tale and in a world where it doesn’t happen.

Sadly, many of the situations we feature are all too common for people. We are here to dispel those myths and uncover the facts around loans and being able to reclaim part of your loan, if you were in a situation where the loan was irresponsibly lent.

On the FOS (Financial Ombudsman Service) website, they feature case studies, demonstrating the real stories around loans and irresponsible lending.

Case Study on the FOS (Financial Ombudsman Service)

In this particular case study, the FOS looked into a complaint where a lender contacted a customers’ guarantor, when the original borrower could not make the payments. The guarantor was complaining that he should have not been accepted as a guarantor.

When the lender continued to ask “Joe” to make payments, he complained that the lender was wrong to accept him as the guarantor on “Paul’s” loan. He said he hadn’t understood that he was agreeing to be a guarantor and can’t afford to make the repayments. “Paul” referred the matter to us when the lender refused to stop asking him for payments.

Source: FOS (
A guarantor agrees to pay the borrowers loan, if the borrower is unable to

The FOS investigated the complaint and found that the lender had not carried out sufficient checks, to ensure that the Guarantor was eligible to co-sign on the original loan.

The lender says it asked Joe what his income and expenditure was and carried out a credit check. We didn’t think this was enough, given that Joe was on a relatively low income, that the repayments would take up nearly 20% of his income, and that his income came solely from disability and other benefits. In the circumstances of this case, we thought the lender should’ve gathered evidence of Joe’s income and expenditure before lending.

We also think that Joe’s credit history – which the lender says it reviewed – contained clear indicators that his financial position was fragile. Had the lender also sought evidence of Joe’s income and outgoings – as we concluded it would have been reasonable and proportionate to do – this too would have raised significant doubts about the affordability of the loan for Joe.

Our investigation showed that Joe was regularly paying over £50 per month in unauthorised overdraft fees. He was behind in his other commitments too, such as utility bills and other living expenses, and we could see that he’d incurred charges as a result. We could also see that his regular commitments amounted to more than £750. His verified income also appeared to be slightly lower than he’d declared to the lender, so that – excluding this loan – he appeared to have less than £20 per month spare.

Source: FOS (
Irresponsible Lending can cause alot of stress and worry

The FOS concluded that the lender had not “adequately checked” that both the borrower and guarantor could afford the loan, and therefore was irresponsibly lending the loan.

The result was that the customer was able to claim a loan refund against the lender, and receive some compensation.

If you have experience a similar situation

The Reclaim Experts specialise in helping our customers to receive Loan Refunds for a variety of loans including Guarantor Loans, Payday Loans (short term) and Doorstep Loans. In simple terms this is claiming back money that you, the borrower, are entitled to, due to your leader not making the necessary checks before they gave you the loan.

If you have found that you were unable to pay the loan you could be eligible to claim compensation. Start your claim or get in touch with the experienced Reclaim Experts team who will guide you through the process. Visit this page to see whether you could be eligible to make an unaffordable loan reclaim.

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