Not upheld: Guarantor loan complaints complaint against New Wave Capital Limited (trading as Capital on Tap)

Decision detail

Summary

Miss S, as guarantor of a £20,000 business credit facility provided by Capital on Tap to her company A, complained that the firm failed to carry out effective affordability checks and that the personal guarantee was invalid. When Miss S fell ill in June 2025 and could no longer work, company A struggled to meet the 10% minimum monthly payments. Capital on Tap initially paused the account but later issued a notice of arrears and closed the account in February 2026. The ombudsman found the guarantee was valid because Miss S, as owner and director of A, had a personal interest in the facility and received consideration through Capital on Tap's agreement to provide credit. The firm's affordability checks were appropriate for unregulated business credit, and its response to Miss S's difficulties was sympathetic and reasonable. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the personal guarantee was valid because: (1) Miss S executed both the credit agreement and guarantee; (2) no witnessing requirement exists for personal guarantees; (3) Miss S was the owner and director of the borrower company with a personal interest in the facility; (4) the guarantee provided consideration in the form of Capital on Tap agreeing to provide the credit facility. The ombudsman was satisfied that Capital on Tap carried out appropriate affordability checks for unregulated business credit. The firm's response to Miss S's difficulties was sympathetic and reasonable, and whether to write off the debt or accept settlement offers is a matter for the firm's commercial judgment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website