Elaine brought her complaint to our service after her bank had rejected her guarantee application.

What happened 

Elaine, who owns a beauty salon, complained to us that a bank mishandled her application for a guarantee, which she’d needed for a business deal with a third party.

She told us the bank had led her to believe her application would be successful. But they’d later rejected it because they wouldn’t accept her property as security for the guarantee. They said they would only accept cash cover.

Elaine said she’d lost out as a result because in the meantime she’d spent a significant amount of money attending to the other requirements of the deal. These included undertaking training run by the third party and purchasing equipment.

When Elaine complained to the bank, she said she’d clearly explained her requirements at the outset, and the bank should have informed her much earlier of their terms. This would have avoided the costs she’d incurred. She wanted the bank to refund her in full for these costs.

What we said 

We reviewed all the available evidence of what was discussed between Elaine and the relationship manager at the bank.

In the bank’s final response letter, they stated it was unlikely they’d have misunderstood Elaine’s requirements if she’d made these clear upfront. But, on the basis of the evidence we saw, we thought it unlikely that Elaine would have misrepresented what she was looking for. 

There was no evidence that the bank had requested cash cover, or that Elaine had agreed to it. And we saw that Elaine had emailed the bank extensively to chase up on progress. In one email, she highlighted that the guarantee was “vital” to her deal and asked the bank to send details of what they needed. There was little by way of response.

We saw from the correspondence that it was several months after the initial application that the bank established that Elaine wanted her property to be the security. It then took just two weeks to decide they wouldn’t accept this. We thought that if the bank had established the requirements sooner, Elaine wouldn’t have committed to the training course or other expenditure.

Moreover, we found the bank had actually told Elaine she’d have to complete the training to get the guarantee she needed for the deal. One email from the relationship manager said that the guarantee had been approved “subject to confirmation that training is complete”.

So we thought it was reasonable for Elaine to have proceeded with her other preparations for the deal. We said the bank should have established earlier what security was being offered for the guarantee, and communicated its requirements clearly to Elaine. We told the bank to reimburse Elaine the full costs of her training and other preparations, and pay her compensation.