
Reclaim mis-sold guarantor loans for free
Get £1,000s back for being mis-sold or treated unfairly
Do you currently have a guarantor loan that you're struggling to repay? Or did you have one in the past? Did your lender offer you the loan without checking your finances properly or were you asked to be a guarantor without getting all the facts? If so, you may be able to reclaim £1,000s. In this guide we'll run you through what counts as mis-selling and how to make a reclaim – if you already know what you're doing, use our FREE reclaim tool to make a claim.
Borrowing from Amigo Loans, or had a loan with it in the past? If you've started a mis-selling complaint against guarantor lender Amigo – or you're planning to – you might not get back the full amount you're owed. That's because Amigo is trying to limit compensation payouts to avoid going bust, and to put in place a complaints deadline. For full details and what this means for you, see our Amigo wants to limit guarantor loan mis-selling payouts MSE News story.

1-min read: How to start your guarantor loan reclaim
Making a complaint about a mis-sold guarantor loan is easy – and it's totally free. And BOTH a guarantor and a borrower can make complaints. We've a summary and quick link to our reclaim tool here if you pretty much know what you're doing. Alternatively, read the full guide below for detailed help.
1. What is a guarantor loan and what's wrong with them? Guarantor loans are often for £1,000s, with a family member or friend being your 'guarantor', responsible for making your repayments if you can't. They're expensive with hideous APRs (we're not fans), often at 50%+, and as repayments last for up to five years, people can pay back over three times what they borrowed given the way interest builds.
2. What counts as mis-selling? Most mis-selling happened when lenders didn't properly check whether the borrower or guarantor could afford the loan (eg, looked at income, expenditure and debts). You might also be due money back if you were treated unfairly (eg, a firm used debt collectors before fair repayment solutions) or you were pressured into becoming a guarantor. Full info in our mis-selling checklists for borrowers and guarantors.
3. You needn't pay a claims firm – use our FREE TOOL. Claims firms can take 25% + VAT off your claim, so instead use this quick link to see the reclaim tool (built with complaints site Resolver) lower down in this guide.
What is a guarantor loan?
If you can't get a loan because of past credit problems or you have little or no credit history, one option is to ask a family member or friend to step in and be your 'guarantor' so you can take out a so-called guarantor loan. This means they will be responsible for making your payments if you can't.
Guarantor loans are a very expensive way to borrow. While their interest rates – around 50% APR – are not as high as the up-to-1,250% APRs charged on payday loans, like those loans, guarantor loans are approved quickly, typically within 24 hours, and are marketed to borrowers with poor credit histories.
Guarantor loans are typically for sums between £1,000 and £7,500, and sometimes as much as £12,000. Mostly they are repaid over a period of between one and five years, meaning interest payments can be enormous. And...
Guarantor loans are expensive – you can end up paying back £175 for every £100 you borrow.
A typical example would be Amigo Loans, which is the biggest lender in the guarantor market. It charges 49.9% APR on a typical loan. This means that if you borrowed £5,000 over three years, you'd need to pay back £8,782.20. In other words, for every £100 borrowed, you pay back £175.
So even though the APR is comparable to some high interest credit cards, unlike a credit card you don't have the flexibility to clear the debt without interest as you'd always pay interest from the second you take out the loan, which means you'll almost always be paying more
Eight in 10 complaints about guarantor loans are successful – that's even higher than for PPI
The latest quarterly complaint figures (covering October - December 2020) from the Financial Ombudsman Service (FOS) show that it has received more than 10,000 new complaints about guarantor loans. Of the complaints the FOS has adjudicated on, it found in favour of the customer in 81% of cases. This is the highest rate of complaint success out of any category the ombudsman oversees – even higher than payday lending and PPI.
Are you the borrower? You may be due cash because of mis-selling or if you were treated unfairly
Given the huge problems in this industry, as well as mis-selling, you may also be due money back if the lender treated you poorly, eg, by failing to put in place a payment plan if you were struggling. Let's go through when you may be able to claim.
Were you mis-sold? The BIG sign is if you can't afford to repay the loan (as they probably didn't check if you could)
If you are struggling to repay your guarantor loan or can't comfortably afford it, and you haven't had a significant change in circumstances since you took the loan out, you might have been mis-sold.
A loan (and any top-up) is deemed unaffordable if it leaves you so short that you fall behind with bills or you need to borrow more to keep up with repayments. It's that simple and is why a lender needs to do the checks of your income, savings and other debts. See 'how lenders should check affordability' below for how they should do this.
This isn't just best practice, it's something the lender has to do to follow rules imposed by the Financial Conduct Authority – the body that regulates financial firms.
Important: It doesn't matter whether you have an ongoing loan or you've already paid it off, you can STILL make a reclaim – while it's always best to raise a case within six years of taking out the loan, if it's longer all is not lost. Even for claims as old as 2007, the ombudsman will consider cases for customers who only found out in the last three years that their lender should have checked affordability.
- Your lender didn't act positively or sympathetically when you could no longer afford the loan repayments. Even if your loan was initially affordable, if your circumstances change, your lender has a duty to treat you fairly. This means if you can't afford your repayments, it needs to work with you to arrive at a solution that is fair and reasonable. If it doesn't, you can complain.
- Your lender used debt collection agencies without first offering other fair solutions. Some customers have reported lenders using debt collection tactics without first offering them fair solutions. Again, this is grounds for a complaint.
- Your guarantor has been asked for payment too quickly. Your guarantor has been asked to pay before you'd missed a payment. For example, some customers have reported that their lender had called their guarantor as soon as they told their lender they were in financial difficulty – even though they were up to date with their payments.
Here, it may be that the guarantor has a complaint too, as they could claim that they were only there to make payments if you missed one, and that hadn't happened.

It's all about being put back to where you could have been if you'd been treated fairly in the first place.
The Financial Ombudsman says the amount awarded depends on what extent it feels the consumer had experienced trouble and upset, as opposed to what the complaint was for. This applies whether you were mis-sold or treated unfairly. We've seen reclaims ranging from £100s to £1,000s so far. While it’s always best to raise a case within six years of taking out the loan, if it's longer all is not lost. Even for claims as old as 2007, the ombudsman will consider cases for customers who only found out in the last three years that their lender should have checked affordability.
Here's what you can expect:
- You will be refunded interest PLUS any fees and charges. If you make a successful reclaim, you will likely be refunded the interest, fees and charges (if you were charged those). Since the interest makes up a considerable portion of the total amount you repay, these reclaims can be sizeable.
- You won't get the original loan amount refunded. You will still have to pay the original loan amount back, since you have already benefited from the loan itself. If you've missed payments or are still only partway through your loan, you may still be left with an outstanding balance, which you will be required to pay.
- You can claim interest on the total amount of your refund. On top of the refund, you can claim 8% interest per year on payments from the date they were paid to the date of settlement. This is basically interest on top of interest plus any fees and charges that might have been charged. For example, if your refund was £1,000 from one loan exactly four years ago, you'd also have 8% of £1,000 (£80) added for each of the four years, so 4 x £80 = £320.
Here's a refund example:
If you borrowed £10,000 at 49.9% APR repayable over three years in September 2017, by September 2020 you would have paid off the loan and interest at a total of £17,566.20. If successful, your reclaim would be:
- £7,566.20 in interest on the loan.
- Plus a further £1,832 which is the 8% simple interest on the interest.
- TOTAL REFUND: £9,398.20.
- You can request for 'black marks' on your credit report to be removed. As well as a refund, you can ask for any poor payment records on loans deemed to be 'unaffordable' to be removed from your credit report. It's not done automatically, but if you use our reclaim tool, Resolver will prompt you to request this. The credit reference agencies take instruction from the lender, so it's up to the lender to request to remove them.
Now you have an idea whether you might have been mis-sold, and know what could happen if your complaint's successful, see our tips on how to reclaim for free.
Quick questions
I'm a guarantor: The mis-selling checklist

Just as many borrowers' loans were mis-sold, many people became guarantors when they shouldn't have or couldn't afford the commitments. If this is you, you may be due cash back.
We have seen four main grounds for complaint for guarantors, and if you can cite at least one of these reasons, you will have a good chance of winning your complaint. But there may be other reasons as well. You know your own situation – if something didn't feel right to you, it's always best to mention it.
The four key reasons a guarantor can complain
It's all about whether you understood it, whether you could afford it and whether you went in to it willingly. Specifically...
- You couldn't afford the payments when you agreed to be a guarantor. Loan repayments need to be affordable for you – even if you're not the borrower. The regulator's definition of affordable is that you have to be able to repay it on time without it leaving you so short of money that you have to borrow more, get behind with bills or sell your house.
The lender's required to check the repayments are affordable, not just for the borrower but for the guarantor as well. If you can't afford to make the repayments (and you've not had a significant change in circumstances since the loan was first taken out), then it's possible it may have been mis-sold to you as a guarantor.
- The lender failed to clearly communicate what being a guarantor meant or didn't tell you that the borrower was taking top-up loans. Lenders must ensure you properly understand what being a guarantor means. While many people understand the implications of borrowing money, the implications of being a "guarantor" are far less understood. For example, Sara Williams of debt advice website Debt Camel says that it's common for guarantors to mistakenly think they will only have to pay if the borrower died or goes bankrupt.
In addition, the lender must let you know if the borrower takes extra loans on top of the original amount, and make sure you understand the implications. Just because you agreed to the first loan, this doesn't mean the lender can assume you will be the guarantor of a top-up. The lender should have checked you were happy with this and that you could afford it – your circumstances may have got worse since the affordability check on the original loan was made.
- You were pressured into becoming a guarantor. People can be put under pressure or bullied into agreeing to become a guarantor, according to Debt Camel's Sara Williams. For example, this could include being asked by a colleague or manager at work and thinking your job could be affected if you say "no", being asked by someone you rely on for help if you are elderly or disabled, or being asked by someone who helps you with your finances – such as your partner who pays half the bills or an ex-partner who pays maintenance.
- You had other financial links with the borrower when they applied for the loan and the lender didn't raise this or take it in to consideration. If you lived with the borrower or have other financial links with the person borrowing the money, the lender should have looked at how your financial situation would be impacted if the borrower couldn't pay the loan.
- You will be released from the responsibility as a guarantor. If you should never have been a guarantor, you will be released from that role. This will remove the problem for you, and the loan will turn into a normal loan for the borrower.
- You will get any payments you've made on the borrower's behalf refunded in FULL. If you have made any payments as a guarantor, the lender would be required to refund all payments in full. This will include BOTH the capital and interest payments (since the guarantor hasn't benefited from the loan, unlike the borrower).
- You get interest back on top of the total amount of your refund. Just like a borrower, on top of the refund you can also claim 8% interest per year on payments from the date they were paid to the date of settlement. This is basically interest on top of interest, plus any fees and charges that might have been charged with 8% on each payment from the date they were made to the date of settlement.
- Your credit file will be adjusted. The lender would be asked to remove any adverse entries on your credit file – including county court judgments and any restrictions on your house.
Now you have an idea whether you might have been mis-sold, and know what could happen if your complaint's successful, see our tips on how to reclaim for free.
It's important to know that you can complain whether or not you've actually had to pay any money on behalf of the borrower.
Quick questions
Lenders might not always admit to partial or complete mis-selling. They may often use phrases such as "gesture of goodwill" or "ex gratia" when offering you redress, but be under no illusion, with nearly nine in 10 complaints (88%) being upheld by the ombudsman, chances are if you had to take it that far, it'd likely (though these things are never guaranteed) rule in your favour.
MoneySaver Sam was inspired to reclaim from his guarantor lender after hearing Martin talk about reclaiming. He emailed us to say:
I had an initial Amigo loan for £2,500, which I topped up several times to around £10,000. I'd been borrowing more just to keep up with the repayments, so I followed the tips on your website and was offered just shy of £14,000. The reclaim has changed my family's life – I can now start planning to buy a house for my family and move away from renting. If it wasn't for your advice and the templates/tools on your website, I wouldn't have been able to do this.
MoneySaver Emma was inspired to reclaim from her guarantor lender after hearing Martin talk about reclaiming. She emailed us to say:
After watching Martin talking on his show about high-interest loans, I decided to have a look at my guarantor loan. I firstly asked my lender to review my payments as they were becoming a bit of a struggle. I complained to my lender through the Resolver site and I received a £10,827 refund on the interest I had paid. Thank you so much!
Don't delay – if your firm goes bust, it could take longer to get a payout and you could get back less than you're owed
Guarantor lenders aren't covered by the Financial Services Compensation Scheme (FSCS), the consumers' safety net if a financial firm fails. So if one goes bust, the size of the payouts given relate to how much money the administrators can squeeze out of the business and how many creditors are lining up.
Even those people who get their claims in just before a company goes bust may not get any more than those who filed theirs afterwards – it all depends on the administrator and the circumstances.
So far, no guarantor lenders are in administration. But as we saw several big-name payday loan lenders go bust in the past 18 months, leaving many customers getting significantly reduced reclaims, it may be wise to get your complaint in early, as we don't know what could happen, especially with the current coronavirus crisis.
If you believe you were mis-sold a guarantor loan by a company that is still active, don't wait to lodge a complaint.
How to reclaim for free
If you think you were mis-sold as a borrower or misinformed as a guarantor and you want to make a complaint, the process is quick, simple and (importantly) free. Just use our free online reclaim tool via complaints site Resolver or use our template letters.
If you complain to the lender via Resolver, it'll help escalate your case too. It will prompt you to contact the Financial Ombudsman Service (FOS) after eight weeks, so if your complaint's rejected, you don't hear back or you aren't happy with the final offer, the FOS will look at your case (though you must escalate it within six months of the rejection/final offer).
Important: Remember, you don't need supporting evidence to get a reclaim started. You simply need your basic identification details and a clear description (in your own words) of what happened. Supporting documents (such as bank statements) can help, but don't worry if you don't have these to hand. We talk about this a bit more here.
You don't need to use a claims management firm
Claims management firms may advertise as 'no win, no fee', but if you do secure a payout, some charge a huge fee – between 24% and 36% including VAT. Yet it's simple to reclaim yourself for free.
For example, one claims management company specialising in guarantor loans charges 36%. This means that for a £4,000 cash reclaim, they would take a whopping £1,440 in fees.
We know some people would prefer not to use the online tool, so if you prefer, you can submit your complaint directly to the payday lender, using our free template letter to help.
This is the first incarnation of this guide. Please tell us your experiences in the guarantor loan reclaim discussion.

Spotted out of date info/broken links? Email: brokenlink@moneysavingexpert.com
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