In December 2023, the Federation of Small Businesses filed a “super-complaint” to the Financial Conduct Authority. The complaint asked the FCA to investigate whether lenders demanding personal guarantees as security for small and medium-sized enterprises may be causing harm to those businesses and individuals.
The FSB claims that businesses are put off loan applications due to the potential for personal liability, and that individuals who give personal guarantees — which shift liability to the individual should the business fail to repay its loans — may then need to take out unnecessary and costly insurance to cover the risk.
