If you had or still have a guarantor loan such as those provided by TFS then you could be due compensation if this loan or any subsequent loans were mis-sold. The Financial Conduct Authority (FCA) has undertaken a review of the selling practices undertaken by the firm which has resulted in a spike in complaints both from borrowers as well as the guarantors.
Considerable sums have been set aside in order to cover compensation for potential mis-sales where the required standards of lending assessment have at best been poor.
What’s wrong with TFS loans?
Any form of loan borrowing regardless of whether the facility is guaranteed or not requires an assessment as to whether the individual borrowing the money has the ability to repay. The lender must quantify all of the information it is been provided through third-party sources and understand the finances of the borrower. The demographic of these forms of loans specifically relates to individuals who are unable to look at traditional borrowing providers. Normally due to not being able to quantify income if they are self-employed or for some reason they have a poor credit rating.
Lending decisions made by TFS sadly did not take into account these areas where they were mainly concerned with the guarantor who ultimately when loans are defaulted will pick up the financial tab.
TFS Refund Compensation Claims
Are guarantor loans bad?
Guarantor loans fit a specific set of clients who are unable to raise finance in the traditional way. The loans are guaranteed by either friend or more likely a relative who will have the responsibility in making payment should there be any default.
The firm lending the money like TFS are responsible for two areas of client interaction.
The borrower – it is essential when dealing with high-risk borrowing where the rewards are greater due to the high interest charges and fees but where there is a risk due to there being a question mark on the borrowers finances and ability to repay. The guidelines must be followed, financial difficulties must be highlighted if further borrowing is requested and the ability to repay must be established with information from not only the borrower but also independently checked.
The guarantor – if the correct procedures are undertaken in establishing whether loans should be made to individuals then the risk drops dramatically in relation to the guarantor. The guarantor for any TFS loan is taking a tremendous risk. Unlike investments there is no potential reward other than your helping a friend or relative, there is no financial gain yet there is tremendous financial risk. All of this should be discussed with you and information provided by TFS.
Where did TFS loans go wrong?
There are several areas which TFS should have checked before lending money and if one or a number of areas have not been looked at properly then this is a basis of mis-selling.
- If you couldn’t afford the loan and the lender didn’t check.
- If you’re expenditure was not verified
- If your income was not correctly assessed
- If your credit file was not assessed
- Top-up loans were not questioned to assess financial difficulty.
If you had any guarantor loan either as a borrower or guarantor it is worth checking to see if any mis-selling took place and if you are due any compensation as a result.