Discretionary Commission Arrangements - Compaints and refunds



Buddy Loans (a division of Advancis Trading) is a guarantor loans company based in Cheadle in the UK, offering borrowing between £1000 and £10,000, with a payback period of twelve to sixty months, as long as they have someone (a buddy!) to guarantee the amount. 

So what is a guarantor loan?

A guarantor loan is an unsecured loan, whereby the borrower nominates someone else to step in and make the payments if they find themselves unable to. As this is clearly less of a risk to lenders, this type of loan will appeal to those with no, poor or bad credit, as it is more likely to be approved.

The guarantor of course needs to have a good or ok credit rating, alongside other criteria, such as minimum income (£1000), UK bank account etc. Being a homeowner also adds credibility to the application, although the guarantor can also be a tenant or living at home with parents.

Compared to a payday loan, guarantor loans are becoming a much more popular and appealing option, as it is pretty much instant cash, but without the enormous interest rates and short repayment terms (typically 30 days). Even if the borrower has a CCJ (County Court Judgement) against them for debt, their application will be considered – it is easy to see how this type of loan could be financial salvation for those who have fallen on hard times. Equally, the borrower could improve their credit rating over time by keeping up with repayments and not defaulting.

Buddy Loans will consider a loan for a wide variety of reasons, such as a new car, home improvements etc. – in fact their “any-purpose” loans mean that even if you just need it to pay bills, they will grant it (assuming guarantor criteria etc is met).

Buddy Loans seem to make it easy to find an appropriate guarantor – family member, from parent to grandparent, uncles/aunts, close friend, work colleague – as long as those nominated have an ok or good credit rating and have an income (1K plus a month), are between 21 and 75 and a UK bank account. They also stress that most of the time the guarantor will not have to do anything, as the borrower will make the payments on time and according to the terms of the loan.

Complaints/problems with Buddy Loans

Buddy Loans, along with other guarantor loans companies, have been subject to many complaints about their loans, with claims that borrowers were irresponsibly given loans, without “reasonable” and “proportionate” checks to ensure that the borrower was able to sustainably make the repayments.

In addition, there have also been complaints that the guarantors themselves have made, claiming that, alongside reasonable and proportionate checks failing to be carried out, the lender did not obtain the guarantor’s “properly informed consent”.

Here at Redbridge Finance, we undertake to look at whether Buddy Loans offered you any irresponsible, or unaffordable lending, typically occurring when insufficient information about income and expenditure has been obtained, from either (or both) the borrower and guarantor. As the Financial Ombudsman Service asserts that lenders are obliged to undertake full due diligence when assessing if a potential borrower should be offered a line of credit, this is at the core of our investigations, and our successful claims for our customers.

How do Buddy Loans differ to bank or secured loans or Payday Loans?

Buddy Loans are a private lender, so there is no broker involved; also, as they are private, and have no affiliations with the banks, they do not have to abide by the bank’s rules, and consequently they can be more “flexible” when considering a customer’s application.

Who are typically Buddy Loans Customers?

As mentioned before, a Guarantor loan, and specifically Buddy Loans, is most beneficial for anyone who, for whatever reason, has no credit (e.g.no credit history due to being a young person new to the country) or bad credit. This is because you provide them (Buddy Loans) with a person known to you who will vouch for you in terms of your ability to repay. The main reason that a Guarantor loan company will happily take the “risk” of lending you the money, is because, if you fail to keep up with or miss payments, they will then look to your guarantor to pay. So you could see it as the lender having two chances to get their money back, rather than just one! They also know that the person you nominate to be your “buddy” or guarantor must be trusted by you, the borrower, as they pay the loan to their bank account.

We mentioned before that guarantor loans were preferable to Payday loans as interest rates were not as high – but this doesn’t mean they do not charge handsomely for the privilege of borrowing from them. In the case of Buddy Loans, (correct as of 01/042021), if you borrowed £3,250 over a three-year term, an interest rate of 41.16% would be applied (Representative APR 49.9% APR); monthly repayments would be £158.57, and the total amount repayable would be £5,711.00, the difference between your loan and your repayment would be £2461.00

How can a Guarantor be affected if the borrower defaults on a payment/payments?

If the borrower misses a repayment, or cannot afford the repayments, not only will this affect the borrowers (already poor) credit rating, it will also adversely affect the Guarantor’s credit rating, a fact which is not always appreciated or understood when the application is being made. Not only that, but if the borrower and guarantor are both unable to meet repayments, then the guarantor risks having their one home repossessed.

How can Redbridge Finance help if I think I was mis-sold a Guarantor Loan?

If either the borrower or Guarantor feel that Buddy Loans lent you money when it was clear that did not make proper in-depth checks to see if you could afford the loan, then we can help by assessing your claim to see if you were mis sold the service they offer.

Our claims experts can take on your case and make a claim for a full refund of all the interest and charges that Buddy Loans has levied. If you want to make a complaint against Buddy Loans, the process is very simple. All you need to do is sign up on our site and let us know which lenders you want to make a claim against. We then assess the information you have provided and take your claim forward by making a complaint on your behalf. We deal with the responses from Buddy Loans, and of course will keep you informed every step of the way.

If you have had problems repaying your loan or you think you might have been mis-sold a loan, then you could be entitled to a refund. Contact us today by going to www.redbridgefinance.co.uk and signing up, and we can assess if you have a claim.