BRITS may seek thousands of pounds in compensation as Guarantee loan complaints more than double
Consumers who’ve missold credit can request a refund – we explain how.
According to accounting firm Mazars, the Financial Ombudsman Service received 16,500 complaints about guaranteed loans last year.
That’s an increase of 178% compared to last year, when 5,900 complaints were filed.
It comes as more and more borrowers default on repayments, which means lenders are chasing the guarantor for the money.
Guaranteed loans are aimed at people who are unable to borrow from other sources due to poor creditworthiness or low income.
In this case, another person, e.g. B. Have a friend or family member make the repayments if the borrower is unable to pay.
If complaints are upheld, lenders are sometimes forced to pay damages to customers and guarantors.
The research revealed that the reasons for the complaints included allegations that the borrower could never afford to repay the loan.
Another reason was that the guarantor was being pressured to take responsibility or didn’t know what the role entailed.
Paul Rouse, Partner at Mazars, said: “Having taken a lenient approach during Covid, lenders are now starting to pursue guarantors for payment.
“That plays a role in the huge increase in complaints.”
A large number of complaints have forced some guarantee loan companies into bankruptcy after failing to meet claims for compensation.
TFS loans for expensive lenders were appointed administrators this month after bad debt claims.
Meanwhile, consumers who missold Satsuma or Provident credit have until Monday (Feb. 28) to file a claim for compensation.
Some Provident and Greenwood doorstep loans, Satsuma payday loans, and Glo guarantee loans were sold to cash-strapped borrowers who could not afford them.
If you took out a loan from one of these companies between April 6, 2007 and December 17, 2020, you could receive a payout.
How to get compensation if you are a borrower
You could receive a payout if you missold a guaranteed loan or were treated unfairly by the lender.
You can make a claim even if you are still paying back the loan or have already paid it off.
First, you need to find out if you’ve missold a loan.
First, look at your old bank statements from when you borrowed the money – you should be able to access them through online banking.
If you struggled to make the repayments, you missold the loan.
That includes cutting back on other major expenses like groceries, rent, and bills.
The lender should never have given it to you if you couldn’t afford the repayments.
You were treated unfairly if the lender didn’t help you when you were told you were having trouble paying back the loan.
This includes not setting a different payment schedule, hiring a collection agency without first offering alternative solutions, or demanding payment from your guarantor too quickly.
How much you are owed by the lender depends on your individual case, but it could be worth thousands of dollars.
However, you will not get the full loan amount back.
It is likely that you will be paid the interest you have paid plus any fees that have been charged to you, e.g. B. for late payments.
You can also claim 8% interest per annum on each payment made from the date of payment to the settlement date.
Borrowers can also request black marks for missed payments to be erased from credit reports.
If you are a guarantor
If you vouch for someone but were also unable to make the repayments, you may also be able to make a claim.
There are four main reasons for a guarantor to complain savings expert. These include:
- able to make repayments
- If the lender never properly explained to you what it means to be a guarantor or when the borrower took out a top-up loan
- You have been pressured to be a sponsor, for example by a work supervisor who will jeopardize your job if you refuse
- You had other financial ties to the borrower when you applied for the loan that would affect your ability to repay, such as: B. because you both had the same rental agreement.
The outcome of your complaint will depend on the severity of the impact it has had on you
However, you may be entitled to a full refund of any payments you made on behalf of the borrower, including interest.
You can also get a refund of 8% interest per annum on payments from the date of payment to the settlement date of your complaint.
In addition, you are released from the obligation to provide a guarantor and can request an adjustment to your creditworthiness file.
How to make a complaint
You are free to lodge a complaint if you feel you have been mis-sold a Guaranteed Loan or have been treated unfairly.
You don’t have to hire a claims firm who charge high fees – some up to 30% of your payout – for the service. For a withdrawal of £1,000, that’s worth £300 in fees.
It is free to lodge a complaint with your lender and you do not need any supporting evidence, just a clear description of why you feel mistreated.
You must do this in writing by email or letter – the address to which you must send it can be found on the lender’s website.
You must include information such as the amount of the loan, the date it was taken, and explain that it is an affordability complaint.
If you don’t hear back from the lender within eight weeks, you can escalate your complaint to the Financial Ombudsman Service (FOS).
Alternatively, MoneySavingExpert and the Resolver complaints site have one free tool You can use to create your case.
It will also remind you to report your case to the FOS after eight weeks.
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