Guarantor Loans Unaffordable Lending Claims
Guarantor lending was once one of the largest segments of UK subprime credit. By 2018 the sector was serving more than 150,000 borrowers, with Amigo Loans alone holding around 88% of the market. Today, virtually every major guarantor lender has collapsed, ceased lending, or wound down — almost all of it driven by mass unaffordable lending complaints. If you took out a guarantor loan, or guaranteed one for someone else, and the lending was unaffordable, this hub explains where the complaints route stands now.
Check your agreements on Recoup, our claim partner’s site
How guarantor loans work — and why affordability matters twice
A guarantor loan is an unsecured personal loan, usually between £500 and £10,000, where a second person — usually a family member or close friend — agrees to repay the debt if the borrower defaults. The model was designed for borrowers who could not access mainstream credit because of poor or limited credit history, with the guarantor’s creditworthiness used to support the application.
Under the FCA’s rules in CONC 5.2A, lenders must carry out a reasonable and proportionate creditworthiness assessment for both parties:
- For the borrower — whether they could realistically afford the repayments sustainably, without borrowing again or missing essential commitments.
- For the guarantor — whether they could realistically cover the loan if called upon, without significant adverse impact on their own financial situation.
Guarantor lenders consistently failed both tests. The Financial Ombudsman regularly upheld guarantor loan complaints at rates of 70–80%, far above the average across consumer credit. The FCA found in case after case that affordability checks were formulaic, that household expenditure was assumed rather than verified, and that essentials like food, energy, childcare and medical costs were systematically under-estimated.
Why most guarantor lenders have collapsed
The pattern across the sector has been remarkably consistent. As affordability complaints rose, lenders’ redress provisions were exhausted, and one by one they exited the market:
- Amigo Loans — the market leader. Stopped lending in 2020. Scheme of Arrangement approved May 2022, closed for new claims November 2022. Customers received around 18.5p in the £, far below original estimates. Subsidiaries went into liquidation in 2025.
- TFS Loans (TrustTwo) — administration February 2022. Fined £811,900 by the FCA in June 2022 for deficient affordability checks on 3,150 guarantors between November 2015 and April 2018.
- George Banco — operated by Non-Standard Finance plc. Placed into managed run-off in 2021 alongside TrustTwo, citing regulatory pressure.
- Buddy Loans — administration 2021.
- UK Credit — ceased new lending. Wind-down still being administered.
- 1Plus1 Loans — small lender that exited the market.
- Bamboo Loans — pivoted away from guarantor products.
What if the lender has gone into administration?.
Patterns of unaffordable guarantor lending
The Financial Ombudsman has dealt with hundreds of thousands of guarantor loan complaints. Recurring patterns:
- Borrower checks were formulaic — declared income taken at face value, expenditure assumed using ONS averages without verification, no scrutiny of credit-file evidence of distress.
- Guarantor checks were lighter still — guarantors signed up with limited explanation of the joint and several liability, and with no proper assessment of whether they could actually cover the loan.
- Vulnerability ignored — many guarantor loan customers were borrowers who had been refused mainstream credit. Existing financial difficulty, payday loan use and recent defaults should have weighed against lending; they typically did not.
- Top-up loans and refinancing — borrowers were offered fresh credit or top-ups while already struggling with the existing loan. Each fresh advance triggered another affordability obligation, which was rarely met.
- Coercion of guarantors — some borrowers used pressure or coercion to secure a guarantor. Where this was evident from the application, the lender should have looked harder.
Lenders we cover
Detailed information on the major UK guarantor lenders, including current scheme/administration status and complaint route:
Tools
- Guarantor loan refund calculator — estimate what a successful claim might be worth based on your loan amount, interest rate, and repayment period.
How a claim works
For active lenders, the standard process applies — complaint to the lender, eight-week response window, escalation to FOS if needed. For collapsed lenders, the route runs through the relevant administration scheme or scheme of arrangement, and most claim windows are now closed. The detail varies by lender; the individual lender pages set out the position for each.
How a claim works step by step. For redress calculation, see How redress is calculated.
Time limits
Related guides
- What is unaffordable lending?
- The CONC rules on affordability
- How the Financial Ombudsman handles unaffordable lending complaints
- What if the lender has gone into administration?
- Do I have an unaffordable lending claim?
Check If You Could Be Owed Compensation
You may be eligible to complain if a lender gave you credit you couldn’t afford. Start a free check in minutes — no paperwork needed. No win, no fee if you choose to proceed.
Check your agreements on Recoup, our claim partner’s site
How much could your claim be worth?
Try our guarantor loan checker — free, takes under a minute, and uses the official figures for this claim type.
