Discretionary Commission Arrangements - Compaints and refunds


George Banco Limited, founded in 2013, operates as a consumer finance company in the UK.  The company offers personal and guarantor loans to customers excluded from mainstream finance as both types of loans are unsecured, and they are a direct lender (no broker).

What are personal loans?

A personal loan, or unsecured loan, available from banks and other lenders, is a loan that is not secured against any asset, for example, your home.

Some benefits of a personal loan are that you can probably borrow more than you can with a credit card. Also, on larger balances, a lower rate of interest is typically charged when compared to a credit card or other credit forms.

Equally, loan repayments are generally a fixed amount each month, which can help with budgeting.

Other advantages of personal loans also come with some pitfalls; for example, you can choose the period over which you will repay the loan – but you must bear in mind that what you are charged in interest is affected by the length of the loan.

Other areas to consider cautiously when looking at taking out a personal loan are the interest rates charged, and the fact that you might not get the interest rate advertised.

For example, with a George Banco personal loan, they quote an interest rate of 60.2% fixed, with a representative APR of 79.9%, which means that just over half (51%) of people who apply and are accepted, should get this rate, or better, leading to the obvious conclusion that the remaining 49% will pay more. Let’s take the George Banco example further: if you borrowed £3,500 over 36 months, with a repayment of £211.97 per month, the total amount repayable would be a whopping £7,731.05.

What are Guarantor Loans and how do they differ from Personal Loans?

Quite simply, when you take out a guarantor loan, a guarantor is required to co-sign the loan along with the borrower. The guarantor can be anyone you “trust” and who trusts you – typically this a family member but can be anyone from a friend to a work colleague. This set up works well for the borrower, as well as the lender. Why? Because while the borrower tends to have poor or non-existent credit, the guarantor generally doesn’t, and so this adds an extra element of security for the lender (and interest rates are hence lower), as if the borrower defaults/misses a payment, they revert to the guarantor to pay it.

However, the borrower still bears responsibility for the loan, even if the guarantor has to make the repayments – defaulting on repayments will still harm the borrower’s credit score, thereby making it even more difficult to get any sort of finance in the future.

Complaints and criticisms about George Banco

Many customers of George Banco, (and other personal/guarantor loans companies) both borrowers and guarantors, have complained that they failed to check that the loan was affordable to the borrower, and that they did not make sure that the borrower was likely to be able to make the repayments for the duration of the loan.

Complaints have been made about vital checks such as evidence of income, credit record check and verification of outgoings not being thorough enough. Some customers of George Banco have gone through the process of trying to get a refund, or compensation, as they were given a loan, despite having a poor credit record, which detailed other recent loans, missed payments, and defaults; if the lender had been thorough, this record would have sent alarm signals indicating that the borrowers financial position was getting worse. Some believe that if the guarantor appears well off, then lenders might overlook the warning signs, secure in the knowledge that they will their money back from the guarantor. Some guarantors have complained that the lender did not obtain the guarantor’s “properly informed consent”.

Other customers have said that once they have a loan with George Banco, it is too easy to top it up; the lender still has a responsibility to check that the increased loan is affordable, especially if it would have been evident with a few checks, that the borrower’s financial situation had changed negatively.

Redbridge Finance has helped many customers who feel that they were mis-sold a personal or guarantor loan, based on the issues mentioned above; we can investigate the thoroughness of checks, or as the Financial Ombudsman Service puts it, “reasonable and proportionate checks”, to ensure that the borrower was able to make the repayments for the whole duration of the loan. We can represent you and your claim that you were unable to afford the initial loan, or further top up loans, and if we do not agree with the lender’s decision (this being a “no” to a refund or compensation, or an offer that we feel is too small), we will then pass your case on to the FOS.

Interestingly enough the FOS decided in favour of the consumer in 90% of cases in the latter part of 2019 – compare this with only 32% of upheld complaints in 2018 and it is clear to see that it is absolutely worth starting a complaint if you feel you were given a loan that you could not afford, or you were encouraged to take out further loans when it was obvious (if the right checks were done) that you could ill afford it.

Another interesting fact to note is that complaints about guarantor loans have surged 3,300% in a year and have ousted PPI as the UK’s most disliked financial product – there were 10,321 complaints from October to December 2020 about guarantor lenders!

Back to George Banco specifically, it is perhaps worth a mention that on the home page of their website, they state under “The Personal Loan” - “By checking a few basic details, we may offer you a loan”; this really does make it sound as if their checks are cursory! More likely it is designed to encourage those who do not want their financial background investigated too closely, i.e., those with poor credit history, to believe that they will be given a loan without too much hassle – which can of course come back to bite when it is actually unaffordable! Also on the George Banco website home page – “The guarantor loan” – “All you need is a friend or family member who knows and trusts you, who can support the loan if for any reason you are unable to make a payment”. Again, designed to make it all sound so friendly and easy – when in fact it is a very serious decision to have this type of loan, for both borrower and guarantor.

To conclude, if you have had problems paying your loan, or you think you have been mis-sold a loan, then you could be entitled to a refund and/or compensation. Contact Redbridge Finance today by going to www.redbridgefinance.co.uk, sign up, and we can assess if you have a claim.