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Problem with Amigo Loans Direct Debit Indemnity
Quickshot82
Posts: 1 Newbie
in Loans
Hi,
In September last year, a friend who I trusted asked me if I would be guarantor for a loan with Amigo, I said yes and the £1,500 loan was paid out. After 5 months and no problems with him making the monthly direct debit payments he asked if he could get a top up on the loan to £3,000. I didn't see a problem with that and agreed and further funds was paid out. I received a letter from Amigo explaining that the top up was on a new agreement along with the outstanding balance from the previous agreement and that the old loan had now been 'Settled' as a result.
After a further 5 months my friend contacted me to say he had made two large payments. I received the monthly statement and indeed saw the two card payments totalling £1,850 which left the outstanding balance of £900.
However, a month later I was contacted by Amigo to say that a Direct Debit Indemnity (DDI) had been made on the account meaning my friend had requested, with his bank, all his direct debit payments to be refunded as part of the DD guarantee scheme. I was then sent a default notice saying that the previous loan agreement was no longer settled and that I had to make immediate payment for the refunded DD's as they could not get in contact with my friend. I tried to contact my friend but discovered he had blocked me on the phone, Facebook and all other platforms. To make the situation worse, he had recently moved and I didn't know his new address.
As you can imagine, I was horrified to find that someone can simply request all their payments back and the bank will simply oblige. After some research online, I found that a DDI can only be requested if money was taken from a DD that was not authorised. Requesting them back when it was authorised is considered a criminal offence covered by the 2006 Fraud Act.
I eventually managed to get in contact with my now ex-friend though his partner but he wouldn't explain the situation and told me it was tuff that I had to pay it, and now he wouldn't reply to me.
The default notice basically said they may take court action against me if I did not pay by 31st of December. However, I feel like I shouldn't be held responsible for something that appears to be fraud against Amigo Loan. On top of that, I found that there Amigo could have appealed the decision within 14 days by providing proof of the direct debit agreement but they did not do this.
I'm going to argue with them that the fraud was against them and not me and by not choosing to appeal (which I could not had done as I was not the aggrieved party) they made the 'easy' decision to pursue me and that I would exercise my right to complain to the Financial Ombudsman Service.
Is there any advice anyone can offer me??
Many thanks in advance!
Ian
In September last year, a friend who I trusted asked me if I would be guarantor for a loan with Amigo, I said yes and the £1,500 loan was paid out. After 5 months and no problems with him making the monthly direct debit payments he asked if he could get a top up on the loan to £3,000. I didn't see a problem with that and agreed and further funds was paid out. I received a letter from Amigo explaining that the top up was on a new agreement along with the outstanding balance from the previous agreement and that the old loan had now been 'Settled' as a result.
After a further 5 months my friend contacted me to say he had made two large payments. I received the monthly statement and indeed saw the two card payments totalling £1,850 which left the outstanding balance of £900.
However, a month later I was contacted by Amigo to say that a Direct Debit Indemnity (DDI) had been made on the account meaning my friend had requested, with his bank, all his direct debit payments to be refunded as part of the DD guarantee scheme. I was then sent a default notice saying that the previous loan agreement was no longer settled and that I had to make immediate payment for the refunded DD's as they could not get in contact with my friend. I tried to contact my friend but discovered he had blocked me on the phone, Facebook and all other platforms. To make the situation worse, he had recently moved and I didn't know his new address.
As you can imagine, I was horrified to find that someone can simply request all their payments back and the bank will simply oblige. After some research online, I found that a DDI can only be requested if money was taken from a DD that was not authorised. Requesting them back when it was authorised is considered a criminal offence covered by the 2006 Fraud Act.
I eventually managed to get in contact with my now ex-friend though his partner but he wouldn't explain the situation and told me it was tuff that I had to pay it, and now he wouldn't reply to me.
The default notice basically said they may take court action against me if I did not pay by 31st of December. However, I feel like I shouldn't be held responsible for something that appears to be fraud against Amigo Loan. On top of that, I found that there Amigo could have appealed the decision within 14 days by providing proof of the direct debit agreement but they did not do this.
I'm going to argue with them that the fraud was against them and not me and by not choosing to appeal (which I could not had done as I was not the aggrieved party) they made the 'easy' decision to pursue me and that I would exercise my right to complain to the Financial Ombudsman Service.
Is there any advice anyone can offer me??
Many thanks in advance!
Ian
0
Comments
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Pay the bill, and send a small claims court summons to your friend for the money he owes you.
Then never, ever, ever, act as a guarantor for anyone ever again.0 -
Your "friend" has in law what is known as defence by indemnity.
You as guarantor have full legal responsibility for all the loan and your friend has none.
If he defended a CCJ, you would end paying him £90 expenses and all the court fees.
Morally, he is a git, legally, your stuffed.I do Contracts, all day every day.0 -
Marktheshark wrote: »Your "friend" has in law what is known as defence by indemnity.
You as guarantor have full legal responsibility for all the loan and your friend has none.
If he defended a CCJ, you would end paying him £90 expenses and all the court fees.
Morally, he is a git, legally, your stuffed.
How can I put this politely? That has got to be one of the most legally inaccurate posts I have ever come across on MSE, and boy, that would be one stiff competition.:)
For one thing, if the borrower has the "defence by indemnity", (whatever that is), then so does the guarantor. (The principle of co-extensiveness.) For another thing, the guarantor always has the right of indemnity from the original borrower.
http://www.lexisnexis.com/uk/lexispsl/bankingandfinance/document/391289/55KB-65S1-F185-X16G-00000-00/Guarantees+and+indemnities%E2%80%94overview0 -
Let this act as a cautionary warning to anyone out who might be foolish enough to consider being a guarantor for anybody, friend or family.
If they don't want to pay you're stuffed.I can afford anything that I want.
Just so long as I don't want much.0 -
Hi, sorry you are in this situation but i don't think there is much you can do. I work with direct debits and there is no way at all a company can challenge a direct debit indemnity claim - the only defense is if the bank had made an error. They won't pursue this as they haven't a choice. The money is take off them automatically.
They have another avenue for the payment (i.e. you) so will go for you rather than your friend if he is not paying.0 -
Quickshot82 wrote: »...Is there any advice anyone can offer me??...
Report it to the police.0 -
I am so sorry you are in this situation.I have no words of wisdom that might help...but surely this cannot be right because then everyone who has an Amigo loan could do this? If Amigo doesn't challenge the decision, then they could end up losing a lot of money because not all guarantors will be able to pay this, even if they do take the guarantor to court0
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Sigh, really Sigh
I could explain it, but I doubt you will get any of it.
The guarantor will be paying the loan, the Friend is no liability, this is not judge judy, its a guarantor loan.
The guarantor has absolute liability for the loan, not his friend, his friend does not have a loan agreement, the OP does.
If you dont get that, well, stick to flaming.I do Contracts, all day every day.0 -
Marktheshark wrote: »Sigh, really Sigh
I could explain it, but I doubt you will get any of it.
The guarantor will be paying the loan, the Friend is no liability, this is not judge judy, its a guarantor loan.
The guarantor has absolute liability for the loan, not his friend, his friend does not have a loan agreement, the OP does.
If you dont get that, well, stick to flaming.
The original borrower is liable for the loan.
So is the guarantor.
The guarantor can go after the original borrower in court to try and recover funds, if they end up paying off the loan for them.
"indemnity" does not apply to the contract between the borrower and the guarantor.
Your comments do not reflect the actual law.2021 GC £1365.71/ £24000 -
On what authority do you base this statement?Marktheshark wrote: »The guarantor has absolute liability for the loan, not his friend, his friend does not have a loan agreement, the OP does.0
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