According to the latest data released by the financial ombudsman, the increase in complaints means lender Amigo, which is the largest provider of guarantor loans, has become the UK’s most complained about financial firm.

The increase in the take-up of such loans and the huge growth in complaints about them, many of which have been submitted by claims management companies, may heighten concerns about the types of product that have emerged following the decline of the payday loans industry.

Guarantor loans, which are often taken out by people who may otherwise struggle to borrow, were the most complained about financial product during the three months to 31 December 2020, accumulating 10,321 complaints, compared with 303 during the same period a year earlier. That averages at 112 complaints a day.

Complaints were made about a number of lenders, however, Amigo attracted the most. The complaints range from borrowers saying the lender should not have given them the loan because they could not afford it, to friends and family members claiming they did not agree to be a guarantor or were pressured into agreeing.

The increase in guarantor-back loan grievances meant that for the first time in 13 years, payment protection insurance (PPI) was not the most complained about financial product.

The Financial Conduct Authority has highlighted its increasing concerns about guarantor loans. In 2019, the regulator said the proportion of guarantors who were having to step in to cover missed repayments had been growing, and in May last year, it launched an investigation into Amigo to examine how the lender assesses customers’ creditworthiness.