Not upheld: Guarantor loan complaints complaint against New Wave Capital Limited

Decision detail

Summary

Mr P, joint director of company T, complained that Capital on Tap unfairly enforced a personal guarantee he had signed for a £20,000 business credit card facility granted to T in November 2019. Mr P claimed he was unaware the guarantee was in his sole name (despite T having two directors) and that the lending was irresponsible. The ombudsman found that the guarantee document was clearly in Mr P's sole name, contained prominent warnings about his potential liability, and that Mr P had the opportunity to read it. The ombudsman concluded that CoT complied with industry standards for taking personal guarantees and was entitled to enforce it when T defaulted in 2022. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Mr P had the opportunity to download and read the guarantee, which was clearly in his sole name and contained prominent warnings about his potential liability. The guarantee document complied with good industry practice standards by informing Mr P of the security requirement and his obligations as guarantor. CoT was entitled to make a commercial decision to take a guarantee from only one director. The irresponsible lending framework does not apply to unregulated business lending, only to lending to Mr P as a consumer. Therefore, CoT acted fairly in enforcing the guarantee.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website