Barclays is chasing me over £38k debt — for a business I already sold

Then the new owner ran up the overdraft of more than £38,200, filed for insolvency in January 2023, and now it seems that Barclays expects me to pay her debt.

I have of course made a full subject access request to get all record of transactions, but have not heard anything back and the due date for this passed some time ago. I still hope to get a recording of the phone call made in November 2020. According to the executive complaints department, which has listened to the calls, I make no reference directly to removal of my personal guarantee, but Barclays acknowledges that I said that I had sold my business and resigned as director.

Barclays Bank did not notify me at any stage over the past three years that my personal guarantee remained in place. I had no communication from the bank as the overdraft balance increased and it did not issue me any statements for the account. On asking for these, I have been told that I cannot get them because I am not a Barclays Business Bank customer.

Having spoken to the senior insolvency practitioner who handled the insolvency of my former business last year, the new owner paid a service fee for the overdraft facility (a director’s personal guarantee) annually from the business bank account and presumably signed it on my behalf, without my knowledge or consent. The Lending Standards Board states that “regular financial information about the borrower should be made available to guarantors, with the borrower’s prior agreement”.

If Barclays didn’t want to release me as personal guarantor upon transferral of the account, it would have been extremely easy to close down this account and ask the new owner to start her own account. Even if this was not possible, my liability could have been limited to the level of overdraft at the time of transferring, which was £0. The bank would then have had to start a new personal guarantor’s agreement with the new owner for her business overdraft.

However at the time that I transferred the account to the new owner and since, my personal guarantor status was not explained to me or even discussed. Barclays has failed to uphold its agreement to the lending standards code and has, at no point in time, given me access or updates to a bank account that I am now meant to personally guarantee.

• Barclays closed my buy-to-let account and £62k is stuck in limbo
• Ten years of Barclays loyalty and I’m dropped

Jill replies

Your former business had two business accounts, one with Barclays and one with NatWest, and in further bad news the new owner of your business ran up a £19,622 overdraft with NatWest, which the bank was also seeking to recover. You were being chased for £57,822 in total.

You complained about NatWest’s actions to the Financial Ombudsman Service, but it told you that it could not consider complaints about personal guarantees made by guarantors for their own business before April 1, 2019. You provided guarantees for your business overdrafts in 2010 and 2017.

Although both NatWest and Barclays are members of the Lending Standards Board and adhere to its rules, I wasn’t convinced that the wording of its rules would help you. Firstly the new owner of the business was required to give permission to the banks to discuss her accounts with you, and secondly the wording indicates to me that you would actively have to ask for the information. As you had no idea you were still responsible for the personal guarantees, there was no reason for you to ask. After you had been approached for payment of the debts and did ask for the relevant documents and information, the banks refused on the grounds that you were not their customer.

I have no doubt that because your overdrafts were at zero at the point of selling the business, and because you had given the personal guarantees several years before, you simply forgot about them. So it would have been incredibly useful and sensible for the banks to nudge your memory by asking what was to happen with the personal guarantees.

I asked both banks to listen to what was said when you called to notify them about the sale of your business, and to check whether information about the personal guarantees would have been visible on the screen to the call handlers at the time of your calls.

After four working days, NatWest told me that resigning as director of the business “does not, in and of itself, release a personal guarantee or extinguish personal guarantor liability”, and that it was legally entitled to seek recovery of the £19,200 under the guarantee. However it then said: “While we remain entitled to seek recovery under the personal guarantee, we have concluded that it is appropriate to remove the personal guarantee as a gesture of goodwill, based on the specific circumstances of this case.”

The next day Barclays also agreed to waive its £38,200 debt, and said: “We understand that despite engaging with the bank and making changes to the mandate, the previous business owner was not aware that they also remained liable under their personal guarantee. Changes in business ownership can be a complicated process and we are currently reviewing our procedures around this, particularly with respect to mandate changes. On this occasion we can confirm that no further recovery action will be taken.”

Your problem is a great reminder for anyone selling their business or retiring or resigning as a director. If you have given personal guarantees for business-related debt, make sure that they are cancelled, transferred to the new owner or that you give notice to the bank to freeze the amount of debt for which you are liable. Take legal advice if you are uncertain about your position and don’t rely on the bank concerned to remind you. Your liability will not end just because your relationship with the business does.

• Compare business accounts

Dad paid out so mum would get £47,000. Then the insurer sent her £16,500

My father died on July 1. He knew he was going to die so left instructions about things to do after his death. Among them was for my Mum to claim just over £47,000 from the life insurance policy that he had been paying into for 32 years. Sure enough, when looking through documents from Phoenix Life, we found a letter from March saying that in the case of either my Dad or Mum dying in the next three years, the survivor would be paid £47,121.

We informed Phoenix Life and I helped Mum to fill the forms to make the claim. On September 27 my Mum received £16,572.30 — almost £31,000 less than the sum assured. I called Phoenix and the person that I spoke to didn’t know why that amount had been paid, and was also able to see that my Mum had, in fact, been promised £47,121. She said that they would look into it and respond. They never did.

My mum has hearing problems so, every week when I visit her, I call Phoenix, and they give some variation of “we are looking into it”. Yesterday I asked to speak to a manager and they said that wasn’t possible. At the hardest time of my Mum’s life, this situation is making it even harder. She is most upset about it, not because of the money itself, but because of the broken promise to my Dad.

Jill replies

Your parents took out a whole of life policy. As well as offering a payout on death, this type of policy also builds up an investment value as premiums are paid, and that value is paid out if the policyholder decides to cash in or “surrender” the policy. The investment value shown on the document you sent me, dated March 2023, was for £16,282, suspiciously close to the amount paid out to your mother after your father’s death. I was sure that Phoenix had mistakenly paid out the surrender value rather than the sum assured.

I asked it to pay the missing £30,000. Nearly five months after the original payment, it has paid your Mum the outstanding £30,686. It has also paid her £1,677 in late payment interest at 8 per cent on the full payout plus £1,500 in compensation for the poor levels of service experienced at a time of family bereavement.

It sounds a lot, but Phoenix made a big mistake and then failed to rectify it for five months. It meant that instead of having time with your Mum to remember and talk about your Dad, you were stuck on the phone chasing her missing money. Unforgivable.

• ‘TfL, why am I paying four times the normal Tube fare?’

Less than happy with my year-and-a-half wait for £330 insurance excess

In May 2022 I was stationary in a Co-op car park waiting for a car to vacate a space. Another car pulled out and hit my car on the left hand wheel arch. I contacted my insurer, Quotemehappy, and on June 9 my car was collected. In July Quotemehappy told me that it had booked my car in for repairs with its garage network, gave me the number of the garage and told me I would have to pay the garage my excess, which was £330.

The car was repaired, I collected it and paid the £330 excess which Quotemehappy assured me would be refunded. QMH told me that Carpenters Solicitors would be contacting me regarding any losses incurred. I had many telephone calls with this company but was told to be patient because the person looking after my case had left and I would be assigned another person.

At the end of October 2022 I had a text from Quotemehappy: ”Good news. We have had confirmation from the third party insurer that they have accepted liability. As you have Motor Legal Cover our partner solicitors will be in touch to assist in any recovery of excess or losses”. This was a full three months after I had been in contact with their solicitor, Carpenters.

In March 2023 I had an e-mail from another solicitors firm saying it was taking over my case and a handler would be in touch. I was asked to provide my bank details so the £330 could be paid in to my account and I was also advised that the matter would be going to court and to expect a wait. Although I have emailed for an update I have heard nothing further.

Jill replies

Quotemehappy is a brand operated by Aviva, so I asked Aviva to refund your £330. It said: “We’re sorry for the delays that the customer has faced and want to reassure them that we are doing everything we can to recover the cost of this claim, which we are now pursuing through court action.”

Insurers are often slow at refunding claim costs, and this slowness can result in legal action. I see no reason why this delay should affect you, and Aviva has now agreed to pay back your £330 before it retrieves the money from the third party insurer — Axa.

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