If you have guaranteed an TFS loan in the past or continue to do so there is the opportunity to redress some if not all of the loss that you have sustained or potentially sustain in arranging the guarantee on behalf of friend or relative so that they may borrow monies. The FCA conducted and are still reviewing lending practices of firms that provide guarantor-based loans and have found many lacked the affordability checks that should have been conducted at the point-of-sale. This potentially renders the sale as incorrect allowing redress to take place.
What Is A TFS Loan?
An TFS loan like other guarantor backed loans is a borrowing facility that can be set up by individuals who may well have difficulty approaching traditional lenders in order to obtain finance. They may well have poor credit ratings or if they are self-employed the inability to show income on their records to justify traditional lending. In order for the lending to take place firms ask for a guarantor to stand behind the lending so should the borrower default they can then approach the guarantor to repay the borrowing in full.
What Does Being a Guarantor Mean?
A guarantor is an individual who guarantees to meet the financial obligations, in this instance the borrower should they default on their borrowing arrangements with the loan company. Being a guarantor is extremely serious and the consequences can be considerable. It should always be detailed that ultimately the guarantor will be responsible for the debt and so entering into any arrangement of this kind needs to be considered extremely carefully.
What Is Wrong With TFS Loans?
In essence there is nothing wrong with TFS loans and the way they portray themselves. Namely giving the opportunity to individuals who would otherwise have difficulty raising finance to obtain borrowing. The problem arose when the borrowing arrangements were not set up in a way that provides protection for not only the borrower but also the guarantor. The firm did not conduct suitable affordability checks, establish income or question any financial arrangements or concerns raised by the production of a credit file. Borrowing was refinanced without suitability checks leaving both the borrower and guarantor exposed. In short the firm didn’t do things as they should and exposed borrowers and guarantors financially to these bad practices.
Can I Make A Claim If I Guaranteed An TFS Loan?
If you are or have been a guarantor of an TFS loan you can certainly look at making the claim on two fronts:
- If you guaranteed a loan or loans and were called upon to repay these we can look at the recovery of that money and interest. These claims can be made without the borrower being party.
- If you guaranteed a loan or loans but no call on you was made to repay the debt could look at some form of compensation to address the potential liability that you would have faced. Cases of this nature are normally in conjunction with the original borrower.
What If I Am Not The Borrower But The Guarantor?
If you did not borrow the money in the first place but were called upon by the lender to repay the debt, as guarantor then you can certainly look at recovering the money that you have paid and interest if it is found that the firm did not undertake the correct process to establish the affordability of the borrowing in the first place. Of course the firm is in a weakened position because by the very nature of your guarantee being called upon the borrower was unable to make the financial commitment.
What If I Don’t Have Contact With The Borrower?
If you do not have any contact with the borrower as is normally the case when the guarantee is enforced then that is not an issue as the arrangements would have been passed on to you by Amigo in order to recover the debt. In essence as if the debt was yours so a claim can be made at the borrower being involved.