Not upheld: fairness and transparency of personal guarantee presentation complaint against New Wave Capital Ltd (trading as Capital on Tap)

Decision detail

Summary

Mrs A, director of company B, complained that Capital on Tap unfairly and non-transparently presented a personal guarantee in a credit agreement signed in November 2019, claiming she was unaware of her personal liability. Capital on Tap argued the guarantee was clearly presented with explicit terms and Mrs A electronically signed both the agreement and guarantee. The ombudsman found the personal guarantee was clearly presented with a bold warning statement, detailed 18-clause terms, and recommendation for independent legal advice, meeting good industry practice standards. The 17-page document ought reasonably to have made clear its importance, and Mrs A likely signed it as she could not have proceeded without accepting all required boxes. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that although this was unregulated business lending with no specific regulatory requirements, Capital on Tap should have acted fairly and in line with good industry practice. The personal guarantee was clearly presented with a bold warning statement at the beginning of the relevant page, explicitly stating Mrs A could become personally liable and recommending independent legal advice. The guarantee terms were detailed across 18 clauses, particularly clauses 4 and 5 which explained the immediate right to demand payment. The 17-page document ought reasonably to have made clear that Mrs A was signing an important document warranting careful review. The tick box acceptance mechanism was sufficiently clear. On the balance of probabilities, Mrs A signed the second agreement as she could not have proceeded without accepting all required boxes including the personal guarantee. The ombudsman could not comment on legal validity but was satisfied Capital on Tap acted fairly in relying on the guarantee once B failed to meet obligations.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website