Not upheld: Guarantor loan complaints complaint against Lloyds Bank PLC

Decision detail

Summary

Mr B, director of a limited company that took EFG-scheme lending from Lloyds in 2020, complained after the company entered liquidation in 2022 and Lloyds pursued him for the full debt under his personal guarantee. Mr B believed he would only be liable for 25% due to the EFG scheme coverage and complained that Lloyds pursued him aggressively without appropriate forbearance. Lloyds acknowledged an error in a letter to the other guarantor that incorrectly stated the full outstanding balance and offered £350 compensation. The ombudsman found Lloyds acted fairly in enforcing the guarantee and that the compensation was reasonable, though earlier complaint matters could not be considered due to time limit rules.

The Ombudsman's reasoning

The ombudsman found that the lending was not regulated lending as it was commercial borrowing to a limited company, so regulatory rules did not apply. However, the ombudsman considered whether Lloyds acted fairly and reasonably. The ombudsman was limited by FOS time limit rules and could not consider matters dealt with in the May 2024 final response as it was referred more than six months late without exceptional circumstances. The ombudsman found Lloyds acted reasonably in seeking to recover the debt via the personal guarantee Mr B had given, as guarantees are enforceable obligations. The error in the letter to the other guarantor and resulting strain between the guarantors justified the £350 compensation offered.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website