Not upheld: unfair reliance on personal guarantee and lack of clarity in explanation complaint against Iwoca Ltd

Decision detail

Summary

Mrs L, director of company O, complained that Iwoca unfairly relied on her personal guarantee for O's revolving credit facility without clearly explaining it or reminding her of its existence. Iwoca had provided the guarantee requirement on their website and in a clearly written one-page guarantee document with prominent warnings to seek independent legal advice. The ombudsman found that Mrs L was aware she was a guarantor, as evidenced by her own statements during onboarding, and that the guarantee document was clearly written. The ombudsman rejected arguments that Iwoca should have conducted affordability checks on Mrs L or provided reminders about the guarantee, as these were not required by industry standards. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Iwoca's use of the term 'unsecured' was fair as it immediately clarified that a personal guarantee was required. The guarantee document itself was clearly written with prominent warnings to seek independent legal advice. Mrs L demonstrated awareness of being a guarantor through the phone call transcript. The ombudsman rejected arguments that Iwoca should have conducted affordability checks on Mrs L as a guarantor, as this was not required by industry standards and guarantees are typically taken as a show of commitment and good faith rather than as primary security. The ombudsman also found no requirement for Iwoca to remind Mrs L about the guarantee when increasing the facility limit.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website