Not upheld: Other regulated complaint complaint against Iwoca Ltd

Decision detail

Summary

Mr F, a director of company C, complained that Iwoca was pursuing him for a debt under a personal guarantee he claimed was not binding. Mr F had queried the guarantee with a broker, who incorrectly confirmed that the loan would be completely unsecured and Mr F's personal assets would not be affected if C defaulted. Mr F signed the guarantee based on this misleading advice, but it later transpired the guarantee made him personally liable. When C defaulted, Iwoca sought recovery from Mr F personally. The ombudsman found that although the broker's advice was misleading, the broker was not acting as Iwoca's agent, and Iwoca had taken reasonable steps to clearly present the guarantee document and recommend independent legal advice. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that although the broker provided misleading advice about the personal guarantee, Iwoca was not responsible for the broker's actions. The broker was not acting as Iwoca's agent; rather, the broker was acting for C as an intermediary to source funding. The ombudsman determined that Iwoca took reasonable steps to ensure the personal guarantee was clearly presented and explained, provided Mr F with a reasonable opportunity to understand it, and recommended he seek independent legal advice. The personal guarantee document itself was sufficiently clear about Mr F's personal liability. Commission payments between brokers and lenders do not, on their own, create an agency relationship. Mr F's complaint about the broker's misleading advice should be directed to the broker, not Iwoca.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website