Earlier in the month, a senior official at the Financial Conduct Authority claimed that there will be a close and careful watch on all guarantor loan providers starting later this year. Although said to be a niche industry with only 12 lenders of such loans in the UK this year, the guarantor loan sector is growing rapidly in its popularity; the leader of its UK market (Amigo Loans) floating at a staggering total of £1.3 billion in last year’s results. These types of loans are used most often by those with bad credit scores and struggle to access finances from other forms of loans.
The Financial Conduct Authority (FCA) has not had particular attention on guarantor loans until recently, its focus being more so on imposing restrictions on such high-cost short-term credit lending as payday and rent-to-own loans. These loans have been those most focused on in recent years due to the high-cost nature of them that leads to larger damages done to those who use them (typically being quite a vulnerable category of society). Furthermore, although there will be a closer eye kept on the guarantor loan industry, the FCA’s focus on the financially high-cost loans is unlikely to change anytime soon.
