National advice charity Citizens Advice (CitA) has spoken of its fears regarding the guarantor loan market. As fewer people take out payday loans, CitA considers it likely that consumers will look to guarantor loans as a possible alternative. It has called on the FCA to subject these lenders to greater scrutiny.

The main concerns CitA has over the activities of guarantor lenders include:

• Failing to explain the guarantor’s responsibilities fully – some guarantors surveyed believed they were providing little more than a character reference for the borrower
• High pressure sales tactics
• Inadequate affordability checks
• Aggressive debt collection practices, such as pursuing the guarantor when the borrower dies, or pursuing the guarantor before genuine attempts have been made to collect payments from the borrower