Good to know: You do not need to use a claims management company to make your complaint to your lender. If your complaint is not successful you can refer it to the Financial Ombudsman Service yourself for free.

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Amigo – With friends like this lender, who needs enemies?

The lending market for those with bad debts has come under heavy criticism in recent years. While payday loans have taken the lion’s share of the media attention, it now finally seems time that guarantor loans were put under the microscope.

In 2019, a BBC Panorama documentary lifted the lid on guarantor loans. Among the people who appeared in the documentary was Emma. She borrowed £8,500 from Amigo Loans, which was her fourth loan, to book a holiday. At the time she was repaying £200 a month. Since that time, she has repaid more than £23,000 over five years, going far over and above the £10,000 she originally borrowed.

Thankfully it seems that Emma is one of a growing number of past guarantor loan borrowers to take on Amigo, and win. This is the story of what Amigo have been doing wrong, and why the Financial Ombudsman’s latest figures are great news for its borrowers.

From good news to bad (and worse) for Amigo

The tactics that Amigo has used to make substantial profits are increasingly being called out, and about time too.

Back in Christmas of 2017, Amigo sent out Christmas cards saying: “Need a helping hand this festive season? Borrow up to £10,000 and you could receive the money within 24 hours”. This is a lender that charges an annual interest rate of 49.9 per cent, in an industry which now requires lenders not to promote borrowing for frivolous reasons.

Other marketing tactics have included newspaper articles which have suggested that guarantor loans are a good way to rebuild a poor credit history. One, with the title of ‘LOAN HELPED ME REBUILD AFTER BREAK-UP’, didn’t mention how expensive the loan was, nor the other considerations that should be made when having a friend or family member guarantee the loan.

In a further news article, titled ‘THE MOST EXPENSIVE AREAS IN THE UK TO GET MARRIED – AND THE PLACES THAT COST JUST HALF THE PRICE’, an undercover report by Amigo was carefully linked to paying for a wedding with an Amigo loan. And In a final example (though by no means the last), Amigo plays on the heart strings by reporting on a couple who paid for a sixth round of IVF with a £10,000 Amigo loan.

These examples are all problematic as high-cost credit such as payday loans and guarantor loans should serve as emergency solutions to short-term financial issues. Yet the majority of borrowers don’t use the loans for this purpose, with financial trouble just around the corner as a result.

By March last year, Amigo had served 220,000 borrowers, and made a cool £72 million in profit in the year to March 2018. This positive news contrasts with the gloomy outlook not only for those who use these loans, but also for those who guarantee them. Where loans go wrong and the guarantor must step in, relationships can become strained.

The percentage of people with guarantor loan debt has risen to 36.3% in 2018, up from 29.9% two years before. This is an incredibly depressing statistic, and the reality behind these loans – which are touted as being about friendship – could be relationships that break down when they should be an important source of emotional support.

The Tide Is Now Turning for Guarantor Loan Claims

The Financial Ombudsman recently reported their latest statistics. Between April and June 2019, 83% of guarantor loan complaints were upheld. This comes at a time when complaints about guarantor loans are on the rise, as the Financial Ombudsmen’s 2018/19 annual report shows that it received 529 complaints about guarantor loans in the last year, a rise of 150% based on the 210 received in 2017/18.

It’s useful to note that cases only reach the Financial Ombudsman once the claimant has contacted Amigo. Once Amigo has responded and either: refused to make an offer of compensation OR made an offer that isn’t acceptable to the claimant, only then is the case referred to the Financial Ombudsman.

Let us be clear – these latest figures are very bad news for Amigo, which only last year floated on the stock exchange, with its value rising as a result. Following the news of the regulator getting tougher on guarantor lenders, the value of Amigo shares have collapsed, diving by 8% in one day. It could be telling that Amigo’s founder, James Benamor, has cashed in all the shares he owned (worth £200m).

“The change in economic outlook, and the potential for regulatory change, means we are taking a more cautious approach to lending and have increased provisioning.

While past recessions have demonstrated the resilience of our business, we believe it is prudent to factor a deteriorating economic outlook into our impairments model. We will continue to monitor the potential impact and will review our position again at the half year”.

Amigo statement

With Amigo’s ownership of 85% of the guarantor market, they must face the very real prospect of considering the claims that are made against them. Which it seems they have been doing (rather than rejecting them at the first chance they get). The consumer advice website DebtCamel notes that readers seem to have had more success in their endeavours.

Let’s take a look at one example.

Mrs W vs. Amigo – A working Example

The details of successful claims aren’t made public by the Financial Ombudsman. However several cases have been published on DebtCamel, with the claimants sending the details directly.

In one instance, we learn about the approach that is commonly used by FOS investigators:

When reviewing these complaints, we consider the following questions:

– did Amigo complete reasonable and proportionate checks to satisfy itself that Mr A would be able to repay this loan in a sustainable way? If so, did it make a fair lending decision? If not, would those checks have shown that Mr A would have been able to do so?

– given Mr A’s circumstances at the time of the application, was there a point when Amigo ought reasonably to have realised it was increasing Mr A’s indebtedness in a way that was unsustainable or otherwise harmful – such that it shouldn’t have provided him with the loan?

– did Amigo act unfairly or unreasonably in some other way?

In one specific case of a guarantor loan (where a ‘Miss W’ was the guarantor rather than the main borrower), the Ombudsman discovered that:

  • Amigo had not thoroughly verified that Miss W could afford the loan; if Amigo had undertaken better checks, they would have known that she could not afford the loan;
  • Amigo did not explain the loan in full before Miss W agreed to the lending;
  • Amigo were unreasonable when attempting to recover money from her, especially since they were aware of her mental health issues.

In response to these failings, the Ombudsman ordered Amigo to:

  • Remove Miss W as the guarantor to the loan;
  • Refund all payments made by Miss W;
  • Provide Miss W with £500 in compensation for Amigo’s failings.

Many guarantor claimants approach us with a case about affordability. However, this isn’t the only reason that can lead to a claim. In Miss W’s case, whether Amigo assessed affordability was difficult to assess. The Ombudsman’s ruling stated that:

“as the borrower wasn’t a party to this complaint, I didn’t have any evidence of the checks that Amigo carried out, or the depth that they went into, before it agreed to lend to the borrower. But the lack of information from both Amigo and the borrower on this matter didn’t lessen the problem, as Amigo was seeking to enforce the guarantee and indemnity agreement. And Miss W says she should never have been accepted as a guarantor in the first place”.

The Ombudsman noted that only few repayments had been made, and that Amigo had then sought to enforce the guarantee (e.g. get the guarantor, Mrs W, to pay).

“both of these factors were indications that the monthly loan payments may have been unaffordable for the borrower in the first place”.

Amigo and Other Guarantor Loan Friends

Amigo is, by far, the largest guarantor lender. Representing around 85% of the market, it’s logical that the majority of claims would also be made against Amigo. That said, there are many other players in this industry, including Jualoans, LendFair, Buddy, Bamboo and

Whether your guarantor loan was from Amigo, one of the smaller firms or another lender, we can help you if your lender…

  • Didn’t complete adequate checks – this could be in relation to verifying:
    • Your income
    • Your expenditure
    • Your credit record
    • Whether your financial situation is worsening
    • Whether your household situation could have a bearing on lending to you

Going back to the case of Miss W, there were several questions that the Ombudsman needed to answer in deciding whether these problems applied to her case. Namely, they sought to answer six questions…

Could the borrower afford the loan? – This relates to the main borrower, rather than the guarantor. In this case, this was problematic to assess.

Was the loan explained properly? – As guarantor loans are a type of lending that may involve a large amount of money over a long period, and as the guarantor would receive no benefit from the loan, it’s all the more important that the guarantor fully understand the agreement.

How large was the loan? – Miss W’s case was a more unusual one, as the loan was to repay an old guarantor loan with another company, with a £1,039 ‘top up’ (e.g. the borrower only received £1,039 in cash, while £5,750 was to be repaid with the original lender). This was not explained to the guarantor, who thought she was only acting as guarantor for the ‘top up’ amount.

Were the implications of a guarantor loan adequately explained? – When providing a guarantor loan, the lender must ask the guarantor whether:

  • They have read the terms and conditions
  • They have understood the terms and conditions
  • They were the one to sign (either online or in-person)

In this case, the guarantor wasn’t asked whether she understood the terms. She also wasn’t told about:

  • Only needing to pay if a Default Notice is served to the borrower
  • Fully referencing AND explaining charging orders and the attachment of earnings
  • The importance of seeking advice from both Citizens Advice, AND a legal professional

Could Miss W afford to repay the loan? – In this case, Amigo had confirmed that the likelihood of receiving its money back were high, however Amigo didn’t analyse how the ongoing repayments might impact Miss W.

Was there any other unfair treatment? – In a final pointer, Amigo didn’t treat Miss W fairly given how she had told Amigo about her mental health issues during debt recovery correspondence and calls.

Could You Have a Claim Against Amigo Guarantor Loans?

Does it seem that the repayments are unaffordable? Are you constantly being sent threatening letters that you may be taken to court? If you’ve had a guarantor loan with Amigo Loans, you may be entitled to a refund.

It’s important to note that even if you kept up with all your repayments, this does not demonstrate that your loan was affordable. This is an argument that has been used time and time again by complaints made against payday loan companies.

Amigo loans, like all lenders are required to:

  • Inform you where you can obtain free independent debt advice – this should include legal advice (as opposed to simply being referred to Citizen’s Advice)
  • Halt debt recovery efforts for a reasonable period while you put together a repayment plan (you may want to speak to a debt advisor if you need help)
  • Give you reasonable time to repay your debt, and possibly freeze the interest and additional charges (they are not required by law to do this, but they are required to consider this option)

The Law on Loans

It’s useful to understand what laws lenders must adhere to when they provide high-cost credit. These laws came into force in 2017, however irresponsible lending before this time is still eligible for a claim if it meets certain conditions.

  1. The loan must have been affordable
  2. The loan must adhere to the following cost caps if the loan involves an interest rate of 100% or more, that also has a loan term of 12 months OR the majority of the loan will be repaid within this period:
    • A cost cap of 0.8% per day on the amount borrowed – this includes both interest and all fees charged.
    • A cap on default fees of £15 – after which default interest can still be charged, but it mustn’t exceed the original rate of 0.8% per day.
    • A complete cost cap of 100% – you should never be asked to repay more than 100% of the money borrowed.
  3. Continuous payment authority (CPA) behaviour must be fair – this means that you must be informed if the lender has set up a CPA (which allows them to deduct payments from your bank account as and when they wish). Lenders must also cancel a CPA if they’ve attempted to collect twice, and both times have failed.

The laws that came into effect in May 2017 also mean that lenders must provide details of their financial products on a price comparison website that’s authorised with the Financial Conduct Authority (FCA). Borrowers must also be provided with a complete summary of the costs of borrowing.

Do you believe that you were given a guarantor loan that was unaffordable? Have you been struggling to keep up on your promise of guaranteed payments as a guarantor? We can professionally manage your claim.

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Our Unaffordable Lending Claims Process

We realise that claiming against a high cost loan lender can seem daunting. We aim to make the claiming process as simple as possible. We specialise in affordability claims. Our experienced team will communicate with the lender (and where required, the Ombudsman service) on your behalf. We use bespoke technology to ensure efficient claims handling. Throughout the process, we inform you of claim progress using a “stage process”, so you can track your progress easily. Please remember though, that you do not need to use a claims management company to make your complaint to your lender, and if your complaint is not successful you can refer it to the Financial Ombudsman Service yourself for free.

  • Step 1

    Pre complaint investigation and analysis

  • Step 2

    Formal mis-selling complaint made

  • Step 3

    Lender responds with a Final Response Letter

  • Step 4

    If appropriate resolution cannot be reached with the lender, referral to Financial Ombudsman Service.

Our Fees

We are one of the few claims management companies that offers a “No Cash, No Fee” service. This means our success fee is only charged on the actual cash you receive – not on debt deductions applied by your lender. To put it simply, you’ll never be left with less cash in your pocket than you began with if you use us.

Our standard success fee is 30% inclusive of VAT calculated on the cash-in-hand that you receive. It couldn’t be more simple.


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  • Our fee £. This fee includes VAT.
  • £ Cash in hand after you pay our fee.

To be clear, we do not charge the success fee for tax deductions or debt deductions of any kind.

Working fee examples:

  • If you are awarded £0 in redress/compensation, there is no charge
  • If you are awarded £1,000 in redress our success fee would be £300 (inc. VAT)
  • If you are awarded £3,000 in redress our success fee would be £900 (inc. VAT)
  • If you awarded £10,000 in redress our success fee would be £3,000 (inc. VAT)
  • If you have an active loan or arrears, the lender will likely reduce or wholly offset any cash in hand you receive. In this scenario, the success fee will be calculated on the cash in hand you receive, for example:

If you are awarded £1,000 in redress but your lender also deducts £500 for outstanding liabilities, our success fee is calculated on £500 cash in hand. Our success fee would be = £150 (inc. VAT).

But don’t just take our word for it – why not try our calculator to see how our fees work on a hypothetical award:-


You can cancel for free within 14 days for no charge. After that, success fees will apply if there has been a settlement proposal and you later go on to receive cash in hand. Please see our Service Summary or Terms of Engagement for more details.

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The Smart Choice For Unaffordable Lending Claim Representation

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We’ve been claiming high cost loan refunds since 2013

Claiming for Free Yourself

Good to know: You do not need to use a claims management company to make your complaint to your lender. If your complaint is not successful you can refer it to the Financial Ombudsman Service yourself for free.