Complaining your guarantor loan was unaffordable

A guarantor loan is a loan where someone guarantees to make the payments if the borrower does not¹. If the borrower fails to make payments, the guarantor is legally liable to pay back the loan for them². When that arrangement goes wrong, both the borrower and the guarantor can complain to the Financial Ombudsman Service, which receives complaints about guarantor loans from both¹.

The ombudsman looks at whether the lender completed reasonable and proportionate checks before it lent to the borrower and agreed to the guarantor, and whether it obtained the guarantor's agreement¹. Where it decides the guarantor should not have been accepted, it will usually say the guarantor should be released from the guarantee, with any payments already made refunded with interest and information removed from the credit file¹. Where the borrower should not have been given the loan, the remedy is a refund of interest and charges paid, with interest, and removal of adverse information from the credit file¹.

Complaints about guarantor loans are not rare. In the first quarter of 2025/26, 52% of guarantor loan complaints were upheld³. In the third quarter of 2025/26, 21 new guarantor loan complaints were opened⁴. The ombudsman has said that for guarantor loans complaints rose by 152% in 2018/2019, and that some of the practice seen has given cause for concern⁵.

Who can complain about a guarantor loan: borrower and guarantor

Both sides of a guarantor loan can bring a complaint. The ombudsman receives complaints about guarantor loans from borrowers and guarantors¹. A borrower has the right to complain to their lender if they were given credit irresponsibly and are now struggling financially as a result⁸. A guarantor is an eligible complainant, but only to the extent their complaint arises from matters relevant to the guarantee or security relationship with the lender⁶.

That distinction matters. A guarantor cannot generally complain about every aspect of the borrower's loan. The complaint has to connect to the guarantee itself: whether the guarantor should have been accepted, whether the implications were explained, whether the guarantor was pressured, or whether the lender's checks on the guarantor were adequate. The ombudsman looks at whether the lender completed reasonable and proportionate checks before it lent to the borrower and agreed to the guarantor, and whether it obtained the guarantor's agreement¹.

There is one exclusion. Complaints by guarantors of loans to businesses are not covered by the ombudsman's guarantor loans guidance¹. For business guarantees, a micro-enterprise or small business that guaranteed a business loan can complain, but a personal guarantee for your own business is eligible only if it was given on or after 1 April 2019⁹.

If you are complaining on behalf of someone else, the ombudsman can accept a complaint from the donor or granter, if they have capacity, or from an attorney on their behalf¹⁰.

The loan was unaffordable for the borrower

When agreeing to a loan, lenders need to make sure the borrower can afford the repayments without too much trouble, and must show what checks they did if the loan is complained about as unaffordable¹. When a borrower applies for a guarantor loan, the lender must do an affordability check for both the main borrower and the guarantor⁸.

The ombudsman has upheld complaints where those checks fell short. In one case, it found that the loan company had not carried out enough checks before granting the loan, and that a proportionate assessment of income and expenditure would have shown the loan was not affordable or sustainable¹¹. In another, it found the lender's affordability checks were not sufficient in verifying the customer's expenditure¹².

The ombudsman sees complaints about unaffordable lending across a range of credit products, from car finance to payday lending¹³. In 2020/21, unaffordable lending was the most complained-about issue, with 57,571 new complaints¹⁴. In the third quarter of 2025/26, irresponsible and unaffordable lending cases increased slightly to 4,800 complaints, up from 4,600 reported in the previous quarter⁴.

If a complaint about affordability succeeds, the ombudsman can order a refund of interest and charges paid, with interest, and removal of adverse information from the credit file. If there is still a balance, it can say all interest and charges should be removed so the balance is only what was lent, deducting payments already made, with any overpayment refunded with interest¹. Where a balance remains, the ombudsman will usually say it is fair for the borrower to pay it back, but in some rare instances it may not think this is fair¹.

The guarantor could not afford to repay

A guarantor loan works on the basis that the creditor agrees to lend the money based on the guarantor being able to repay the loan in full¹⁵. The guarantor must prove they can afford the repayments, based on their income, savings and any assets¹⁵. Creditors sometimes require the guarantor to be a homeowner to demonstrate that they have assets to potentially cover the loan¹⁶.

That means the lender's affordability check on the guarantor is not a formality. If the guarantor could not realistically afford to step in, the lender's decision to accept them can be challenged. The ombudsman looks at whether the lender completed reasonable and proportionate checks before agreeing to the guarantor¹.

There are serious risks in guaranteeing a loan. The cost of the debt can be high and the interest rates can be high¹⁵. If you agree to be a guarantor for someone else's debt, you can be held liable for it if they fail to pay¹⁷. You have to pay back what they owe¹⁸.

The position is different if the borrower enters a formal arrangement such as bankruptcy, a debt relief order or an individual voluntary arrangement. The borrower's liability for the debt is included in the formal arrangement, but the guarantor remains fully liable and is expected to maintain the original repayments¹⁶. If the arrangement is informal, such as a debt management plan, the borrower remains liable and the loan company can continue to take action if the guarantor does not maintain the original repayments¹⁶. In practice, the loan company will default the loan and contact the guarantor to maintain the original repayments¹⁶.

Pressure to sign as guarantor

Pressure to sign is a recognised ground for complaint. MoneyHelper states that if your partner or a family member is pressuring you to act as a guarantor for a loan, this is financial abuse². The ombudsman has published a case study about a consumer who was coerced into being a loan guarantor by a family member¹⁹.

Pressure can also come from outside the family. You may need to challenge responsibility for a loan if you were put under pressure by another person, for example by a partner, to sign, or were misled by a lender¹⁷. In the private renting context, a landlord might not be able to use a guarantor agreement if the guarantor was pressured or misled into signing, and a court can decide whether it is still in place if that is not clear²⁰.

There is a practical point about who the lender deals with. In one ombudsman case, the agreement for the guarantor had been sent to the borrower's own email address, but the business did not investigate that¹⁹. That failure formed part of the complaint.

If you are being pressured, the ombudsman can look at the circumstances in which the guarantee was given. The ombudsman's guarantor loans guidance covers complaints where the guarantor should not have been accepted, which can include cases where the guarantor's agreement was not properly obtained¹.

When the implications were not explained to the guarantor

FCA rules place a specific duty on lenders. Before making a regulated credit agreement, the firm must provide the guarantor with an adequate explanation of the circumstances in which the guarantee or the indemnity might be called on and the implications for the guarantor of being called on⁷. The same duty applies to peer-to-peer agreements before the agreement is made⁷.

The rule applies where an individual other than the borrower is to provide a guarantee or an indemnity in relation to the regulated credit agreement⁷. For deferred payment credit agreements with a guarantor, the firm must, before making the agreement, provide the guarantor with an adequate explanation of when the guarantee or indemnity might be called on and the implications, plus necessary product information²¹.

If that explanation was not given, the complaint can rest on the lender's failure to follow the rule. The ombudsman has found against a business where the guarantor agreement was sent to the borrower's own email address and the business did not investigate¹⁹. In a separate case about a mis-sold account, the ombudsman's reasoning was that the customer probably had not been given enough information to realise the account was not right for her and did not know she would not be able to use its main benefits²².

The ombudsman's guarantor loans guidance confirms that it looks at whether the lender obtained the guarantor's agreement¹. Where the implications were not explained, that goes to the heart of whether the agreement was properly obtained.

Other grounds for a complaint

Affordability and explanation are the main grounds, but they are not the only ones. A complaint can also cover how the lender behaved once payments were missed. The ombudsman can look at complaints about unfair charges applied to an account, such as arrears fees, legal costs and field agent visit fees, and about a lender that will not agree to a concession the borrower asked for, such as a temporary switch to interest-only or a term extension²³.

Harassment is another ground. The ombudsman can look at complaints that the lender is harassing the borrower about arrears²³. StepChange advises that you can make a complaint if a creditor does not treat you fairly or acts outside the law²⁴. In one ombudsman case, a customer's father had told the lender he could not afford the payments they were asking for, but they still kept calling²⁵.

If the lender does not uphold the complaint, or does not acknowledge it, you can escalate it to the Financial Ombudsman Service⁸. The ombudsman can tell the lender to adjust the amount you owe, to set up a fair repayment arrangement based on your current money situation, or in some cases to stop seeking repayment from you entirely²⁶. It may also tell the lender to pay compensation for any distress or inconvenience²⁷.

Complaints can be made on more than one ground at once. It is possible to make complaints to different organisations simultaneously²⁸. The ombudsman's consumer credit remit covers payday loans, the affordability of the lending, and other types of lending including mortgages²⁹.

What to include in your complaint

Start with the lender. Explain to your lender what you are unhappy about, and the reasons why. If you are not happy with their response, you can bring the complaint to the ombudsman with as much information as possible³⁰. The ombudsman is free to consumers³¹.

A complaint that covers the key points will be easier to assess. Include:

• Whether you were the borrower or the guarantor, and the date the loan was taken out.
• Your income and outgoings at the time, for both the borrower and the guarantor if you are complaining about affordability.
• What the lender asked you for, and what it did not ask for, before agreeing the loan or the guarantee.
• Whether the guarantor was told, before signing, when the guarantee could be called on and what that would mean.
• Any pressure to sign, who applied it, and when.
• Any payments already made, and by whom.
• Any charges added, and any contact from the lender or its agents that felt like harassment.

The ombudsman's own data shows that complaining is not always straightforward. In 2024, 65% of complaint raisers in the general insurance and protection sector found the process very or fairly difficult, or were unable to do it³². Free help is available: MoneyHelper on guarantor loans², StepChange on irresponsible lending and affordability checks⁸, and Advice NI on payday, guarantor and doorstep loans¹⁶.

If the loan has already been repaid, a complaint can still be worth making. The ombudsman can order refunds of interest and charges paid, with interest, and removal of adverse information from the credit file¹. If you complained about a product before but did not get a refund, you might be able to complain again on a related issue³³.