Reclaim mis-sold guarantor loans for free

Get £1,000s back for being mis-sold or treated unfairly

Updated 5 October 2021

Guarantor loans recently overtook PPI as the most complained-about financial product, according to figures from the financial ombudsman. More than 90% of those were for Amigo, the UK's biggest guarantor lender. In this guide we'll run you through what counts as mis-selling and how to make a reclaim, including special help for Amigo customers.

1-min read to start your guarantor loan reclaim

Making a complaint about a mis-sold guarantor loan is easy – and it's totally free. 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 are guarantor loans and who sells them? Guarantor loans are when a family member or friend agrees to be your 'guarantor' if you miss a repayment. 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. Amigo is by far the biggest name. Others include Bamboo, George Banco, Buddy Loans, TrustTwo and TFS Loans.

2. What counts as mis-selling? The big mis-selling tell is if you can't afford the loan, whether you're the borrower or guarantor. You may also be due money back if you were treated unfairly. Full info in our mis-selling checklists for borrowers and guarantors.

3. How much are you due back? In a nutshell, borrowers typically get all interest and any fees back plus 8% interest on top. Guarantors get similar, but you may also get any payments you've made on the borrower's behalf back. See what you're due back if you're a borrower, and find out here what you could get back if you're a guarantor.

4. Had an Amigo loan? The High Court rejected a proposed scheme of arrangement by Amigo, which would have capped customer payouts. Amigo has since said it's reviewing its options, including a new scheme. All claims are currently on hold. You CAN still make a reclaim, though how long it will take and how much you'll get is yet to be determined, see more in I'm an Amigo customer, what do I do?

5. You needn't pay a claims firm – use our FREE TOOL. Claims firms can take 25% + VAT off your claim, so instead use our free reclaim tool.

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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.

Guarantor loans have now overtaken PPI as one of the most complained-about financial products

Figures from the Financial Ombudsman Service (FOS) show that it received more than 10,000 new complaints about guarantor loans between October and December last year – up from 303 new cases over the same quarter in 2019.

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.

Some inspiration... 'I received a payout of £14,000'

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 over eight in 10 complaints (81%) 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.

What Amigo says

An Amigo spokesperson said:

"All borrowers and guarantors go through robust affordability checks before an Amigo loan is made. This includes recorded conversations, where individuals are asked a series of specific questions to make sure they understand the information they are being asked to provide, their role and responsibilities. We take affordability very seriously and will not lend to anyone who cannot afford it.

"Any borrower needs to provide a full and accurate picture of their finances. The case study mentioned clearly misrepresented his true financial position to us at the time of application for his loan.

"We look at each customer complaint on a case-by-case basis and, in this instance, we concluded that based on being provided with the full and complete information about the borrower's finances, some of the loan agreements were not affordable. It was for this reason that this particular complaint was upheld."

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!

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)

Lenders have to check that you can afford the loan before lending you the money. So 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.

How lenders should check affordability

It may not be clear to you whether your lender has or hasn't checked these things, so all you need to go on is "was the loan affordable when you took it out?". This is what the lender's meant to check:

1. It should check your expenditure. You may have said your outgoings were too low because you guessed, filled out the application too quickly or were just desperate and your lender didn't verify your numbers. While lenders are not required to review bank statements before lending, the ombudsman says it would typically expect lenders to check a customer's income independently, and look at any 'observable trends' such as frequent refinancing, increasing levels of debt and how much the debt costs each month.

2. It should take variable wages into account if you're self-employed. If your wages vary, your lender needs to ask about this and take it into account when checking if you can afford the loan.

3. It must properly check your credit record. If you had other loans and debts, your lender should have seen from your credit record and would have known that your finances were not sustainable.

4. It must check if you can afford top-up loans. If your lender offers you – or you apply for – extra loans on top of your original loan (also known as 'top-ups'), your lender needs to make sure you can afford these extra payments, even if your original loan was affordable for you.

If you were treated unfairly (eg, the lender failed to put you on a special payment plan if you were struggling), you could also be due redress

Once you have the loan, you're a customer of the loan firm and it has a duty to treat you fairly. If it doesn't do this, you could have grounds for a complaint and a reclaim. While the majority of complaints are to do with mis-selling due to lack of affordability checks, the ombudsman also gets complaints about customers being treated unfairly.

Here are some of the reasons guarantor loan customers have successfully complained to the ombudsman on the grounds of being treated unfairly. Even if your situation doesn't fit one of these reasons, but you still feel like you were treated unfairly, you may still be able to make a successful reclaim:

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.

How much can I get back if I'm the borrower and my complaint (for either mis-selling or being treated unfairly) is successful?

To start off, the key point is:

It's all about being put back to where you would have been if you'd been treated fairly or not mis-sold in the first place. In most cases, this means you'll get the interest and any fees and charges back.

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.

As a general rule, here's what you can expect (the same principles apply whether you were mis-sold or treated unfairly):

You will likely be refunded interest PLUS any fees and charges from the time you were mis-sold or deemed to have been treated unfairly. The reason you'll get the interest plus any fees and charges back is because this is essentially the cost of the loan – a cost you’d never would have paid unless you’d not been mis-sold the loan in the first place.

If you make a successful mis-selling reclaim, you will likely be refunded MOST, if not all, the interest, fees and charges (if you were charged those) since the mis-selling happened when you first took out the loan. Since the interest makes up a considerable portion of the total amount you repay, these reclaims can be sizeable.

If you make a successful reclaim based on being treated unfairly, the amount of interest, fees and charges you get back will be from the time you were unfairly treated. Some customers will find they were treated unfairly from the outset, and will therefore get most of their interest, fees and charges back, but others might get proportionally less.
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.

It's important to understand that 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.

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

What evidence do I need to make a claim?

Whether it's an affordability reclaim or a fair treatment reclaim, all you need is your basic identity details (name, address, date of birth), your loan reference number and a brief explanation of your situation.

For example, if you had a number of other loans or debts, you believe you were treated unfairly or are struggling financially, you just need to describe this in your own words. (Both our template letter and free reclaim tool clearly walk you through where this information needs to go.)

You do not need any specific evidence to make a successful reclaim, and anecdotal evidence suggests that failure to do proper checks is so common that both lenders and the ombudsman are upholding complaints without the need for supporting documentation.

But anything you choose to add, such as bank statements, benefit claims and statements from other debts and loans, will help. There are clear prompts in the reclaim tool to show you where to upload these.

MSE tip: It's helpful, but not essential, if you can attach three months' worth of bank statements to your complaint. So three months of statements before each loan or top-up, and two months afterwards. For example, if you took out a loan in August 2020, send statements for May-September 2020.
Can borrowers and guarantors both submit complaints?

Yes, they can both put in complaints simultaneously. But it's worth noting that the complaints will not be about the same thing. As outlined in our checklists, while the complaints will both be about the same loan agreement, the guarantor would complain about the guarantor aspect of the loan and the borrower would complaint about the borrowing aspect.
Will complaining affect my guarantor?

Complaining won't affect your guarantor if you carry on making the payments. Your guarantor won't be told you have complained.

If you stop paying the loan when you make a complaint, your lender may decide to get your guarantor to pay it – if you don't want this to happen, you must keep up with your payments.

Think about whether your guarantor also has a good reason to complain – if they win a complaint, they will be removed as a guarantor, which would take a lot of pressure off you.

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.

How much can I get back if my claim is successful?

How the firm resolves your complaint depends on what you've complained about. However, any or all of the following may happen if the lender agrees with your complaint...

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

What evidence do I need to make a reclaim?

All you need is your basic identity details (name, address, date of birth), the loan reference number and a brief explanation of your situation.

For example, if you had financial links to the borrower, you believe you did not understand the implications of being a guarantor or were yourself struggling financially, you just need to describe this in your own words. (Both our template letter and our free reclaim tool clearly walk you through where this information needs to go.)

You do not need any specific evidence to make a successful reclaim, and anecdotal evidence suggests that failure to do proper checks is so common that both lenders and the ombudsman are upholding complaints without the need for supporting documentation.

But anything you choose to add, such as bank statements, benefit claims and statements from other debts and loans, will help. There are clear prompts in the reclaim tool to show you where to upload these.
Can borrowers and guarantors both submit complaints?

Yes, they can both put in complaints simultaneously. But it's worth noting that the complaints will not be about the same thing. As outlined in our checklists, while the complaints will both be about the same loan agreement, the guarantor would complain about the guarantor aspect of the loan and the borrower would complain about the borrowing aspect.
I am a guarantor, will it affect my credit record?

Whether or not the account shows on the guarantor's report, and when, depends on the lender's policy.

The loan may only show on the borrower's credit report initially with at least one of the three main credit reference agencies.

However, if the guarantor is called upon to make the payments, this could lead to a record of these expected payments to be registered on their own report, which could then impact their credit score and ability to get credit in the future.

In other cases, lenders will record the account as a 'joint account' from the start. This means the account will show on both credit reports. The primary responsibility to pay will remain on the account holder, and transfer to the guarantor if payments are missed.

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Amigo customer? The lender's proposed rescue and compensation scheme has been rejected by the High Court

Amigo, the UK's largest guarantor lender, saw complaints against it skyrocket from around 500 in 2019 to more than 13,000 in 2020, according to the Financial Ombudsman Service (FOS). And as a result of these complaints, last December it proposed a "scheme of arrangement", which would limit payouts and ultimately help it avoid going into administration.

However, the lender's rescue plan was rejected by the High Court at the final stage of the approval process. The FCA said it believed the scheme as proposed was "inherently unfair" and that a fairer compromise could have been offered to customers, but was not. Previously, a High Court hearing and a creditors' meeting both gave approval for the scheme.

Amigo is now working on a possible second scheme of arrangement, this time with input from previous borrowers and guarantors, along with independent advisors. A spokesperson for Amigo said that the firm was working "to find a solution that provides the best possible outcome to anyone with a valid claim. We don't yet have any timeframe on when we will announce the next steps, but we will update the market as soon as we are able to do so."

We will continue to update this guide as soon as we've more info, but this is what we know so far:

ALL current claims are on hold

Amigo has confirmed that existing claims are currently "on hold" while the board decides what to do next (this includes whilst it considers the possibility of a second scheme).

You are still able to escalate your complaint to the ombudsman if you've already submitted a complaint to Amigo and it hasn’t dealt with your complaint fairly after eight weeks.

While the ombudsman has put its Amigo complaints on hold, it has confirmed that it's still considering its own next steps in light of the judgment. There is no harm in escalating your complaint, as there could be a benefit if it decides to re-start adjudicating claims as you will then already be in the 'queue'. We will update this guide as soon as we can confirm more details.

You can STILL make a new claim, but it will be put on hold

If you believe you were mis-sold, you can make a complaint. While current claims are "on hold" there is no harm in putting in a fresh claim while it's front of your mind – though there is not a "first in the queue system". The Financial Ombudsman Service has said there is nothing stopping customers making claims in the meantime.

To make a claim, use our quick and free tool below.

If you have an existing loan you MUST continue to repay it as normal – though SOME will be able to pause repayments

Borrowers who have made a complaint about an ongoing loan agreement with Amigo must keep up with repayments, even whilst the complaint is being processed or on hold. If you do not keep up with repayments then your credit score may be harmed and your guarantor could be asked to make repayments.

However, some people are able to pause repayments through an option called 'equitable set-off'. Equitable set-off lets you pause your repayments until a verdict has been reached on your complaint.

Amigo explains the equitable set-off option, as follows:

"If you have a valid claim due to the loan being assessed as unaffordable at the time it was taken out and you are due a 'redress payment' as compensation, then you will be able to set off that redress payment against your outstanding loan balance."

It sounds complicated, but it's basically an agreement that says: If you owe someone some money, but they also owe you money, they can't make you pay the amount you owe them, because some (or all of) the amount they owe you cancels it out. You 'set-off' the debts against each other.

When you have a complaint against a loan provider – such as an affordability complaint – the same theory applies. You owe the lender the current balance of your loan, but if your complaint is upheld, the lender will owe you an interest refund.

Important: Even if you choose to go forward with equitable set-off and pause repayments, interest will continue to accrue on your loan. This means that if you lose your complaint, the amount you owe will have increased.

Amigo has also warned that it is obliged to report the status of your account to the credit referencing agencies. If you choose to stop payments through an equitable set-off agreement, this will be reported, and it may have a negative impact on your credit file. However, if you win your complaint, Amigo says it will take the necessary steps to update and rectify your credit file (though this can take a few months).

If you're unsure whether your claim will be upheld, think very carefully about whether equitable set-off is the right option for you. If you lose your case you will end up repaying more, and may find it harder to apply for credit.

Am I eligible for equitable set-off?

Not everyone is able to stop their repayments. To be eligible, you'll need to fulfil the following criteria:

You have an outstanding loan that you're still repaying to Amigo
You have filed a complaint about the loan that could result in a payout
The total amount you've repaid to Amigo so far (including capital repayments and interest) is greater than the original amount you borrowed

So, if you originally borrowed £3,000 from Amigo, you'll need to have repaid at least £3,000 to be able to pause future repayments.

Quick question

How do I apply for equitable set-off?

If you think you might be eligible for equitable set-off, it's important that you don't just stop making repayments. If you just stop paying, you will harm your credit score, and your guarantor will be asked to make payments on your behalf. You MUST contact Amigo first.

Start by sending Amigo an email with your basic identity details (full name, address), and the loan reference number. It can also be useful to refer to your current, outstanding complaint against them. State in your email that you believe you might be eligible to pause your payments with an equitable set-off agreement, and that you'd like to start the process of arranging this.

If you fulfil all of the criteria above, Amigo will then ask you to fill out a form and submit it back to them. They should then confirm the conditions of the equitable set-off agreement with you. Once this is complete, you will be able to stop your repayments.

Important: Even if you choose to go forward with equitable set-off and pause repayments, interest will continue to accrue on your loan. This means that if you lose your complaint, the amount you owe will have increased.

Amigo has also warned that it is obliged to report the status of your account to the credit referencing agencies. If you choose to stop payments through an equitable set-off agreement, this will be reported, and it may have a negative impact on your credit file. However, if you win your complaint, Amigo says it will take the necessary steps to update and rectify your credit file (though this can take a few months).

If you're unsure whether your claim will be upheld, think very carefully about whether equitable set-off is the right option for you. If you lose your case you will end up repaying more, and may find it harder to apply for credit.

For other guarantor loan providers - get your complaint in quick or you could end up with nothing if your lender goes bust

The risk of delaying a valid complaint is that if the firm goes into administration you could get nothing, or very little of what you were due. For many people this could mean missing out on £1,000s.

So far, no guarantor lenders have gone into administration, but Amigo has publicly stated that if its proposed scheme doesn't go ahead, there is a strong possibility of it going bust.

We've seen that happen to several big-name payday loan lenders, leaving many customers getting significantly reduced reclaims, so it may be wise to get your complaint in early, as we don't know what could happen.

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.

The reason you won't get anything if your lender would go bust is because guarantor lenders aren't covered by the Financial Services Compensation Scheme (FSCS), the consumers' safety net if a financial firm fails.

So if a firm 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. That's why it's so important to not delay a claim as it could mean you will get back much less than you're owed or even end up with nothing.

Can I still make a reclaim even if my lender has gone bust?

It's still possible to make a mis-selling complaint after a guarantor loan firm has gone bust, however how much you'll get all depends on how much money is left over and how many creditors this has to be shared between. Unfortunately, customers are at the back of the queue of people owed, being counted as 'unsecured creditors'. This means they're unlikely to see all the money they're due and could be waiting months.
Can I stop my repayments if my lender goes bust?

If your lender goes bust and you're paying back a loan, you're likely to have to continue paying until the administrator tells you otherwise.

Keep to your regular payment schedule. If you miss any repayments, you could be hit by fees and additional charges.

Missing repayments could also harm your credit rating, because other lenders look at how you've managed your existing credit when working out whether or not to lend you money.

In some cases, what you're owed for being mis-sold could be wiped from the ongoing loan. You could be due the interest and charges, and interest on all of that too.

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 - including for Amigo customers - 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.

Ready to get started?

Amigo customer? You can still use our claims tool
If you believe you have been mis-sold or treated unfairly you can still complain via our tool - there is no harm in putting in a new claim, though all claims are currently on hold.

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.

Don't want to use Resolver? Use our free template letter to do it yourself

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.

Template letters to send to guarantor lenders

Speak to the guarantor lender or check its website for the address of the complaints department. Generally these things are best done in writing, but if that's too difficult, don't worry about calling. Just ask that it is noted down as a formal complaint, and also ask for written confirmation.

Don't feel you have to be formal. Just explain the point clearly, concisely and honestly, as if you were explaining to a friend why you've been wronged. To help, we've put together template letters to start you off. There's one if you're a borrower and another if you're a guarantor. Just download it and fill in the blanks. (Use it to help start you off, but the more you write in your own words, the better.)

Download the borrower template letter here.

Download the guarantor template letter here.

Important: Keep a copy of the template letter – it'll be helpful if you end up needing to go to the ombudsman.

But there's something crucial you need to understand. At this stage, reclaiming's like a game of 'who blinks first?' Your payday lender may say "no". If so, don't worry. You can take your case to the FREE ombudsman (see below).
No response? Rejected? Escalate to the FREE ombudsman

If you don't hear back from the lender after eight weeks, or if your complaint's rejected or you're not happy with the response, you should escalate your complaint to the free, independent Financial Ombudsman Service (FOS). This is the official, impartial body for settling disputes between individuals and financial companies.

You need to fill in the FOS complaint form.

As with the first letter to the guarantor lender, which you could always copy and paste, don't feel you have to be formal. Explain the point clearly, concisely and honestly, in your own words, just as if you were explaining the situation to a friend.

It's simple to fill in, though take care. If you need help filling this in, you can call the FOS on 0300 123 9123 or 0800 023 4567, and it'll guide you through the claim.

You can send it back by post or fill it in online. Attach any paperwork to back up your case.

The ombudsman will send you a confirmation letter to say it'll look into your case and get back to you if it needs any more information.

The ombudsman will decide whether the circumstances under which the guarantor loan was sold were unfair, then decide what redress is required. In most successful mis-selling cases, this means a refund.

This is the first incarnation of this guide. Please tell us your experiences in the guarantor loan reclaim discussion.

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