National Westminster Bank · DRN-6058926

The complaint Ms P complains that National Westminster Bank Plc mis-sold a government-backed business loan to her. Specifically, she says she was not told that the government would not cover the loan if she was unable to do so. What happened On 8 January 2018 Ms P signed a loan agreement under which she would borrow £119,000 over ten years to fund the purchase of a business. The loan was in Ms P’s sole name (she operated as a sole trader) and was made under the Enterprise Finance Guarantee (or “EFG”) scheme, a scheme established in 2008 to encourage banks to lend to businesses which were unable to provide security for their borrowing. Under the scheme, the government would guarantee up to 75% of a loan. Ms P was able initially to make the monthly payments of nearly £1,000, but she has explained that more recently ill-health has meant that it has become more difficult to do so. In October 2024 she complained to the bank that she thought the loan had been mis-sold. She said that the loan structure had not been properly explained to her and that she had been misled into thinking that the government guarantee would protect her, not the bank. NatWest considered what had happened but did not agree that it had mis-sold the loan. The guarantee arrangements were, it said, clear and the loan terms explained that she remained liable for the full amount of the loan. Ms P did not accept NatWest’s response and referred the matter to this service, where one of our investigators considered what had happened. She issued an initial assessment but did not recommend that the complaint be upheld. Ms P did not accept the investigator’s assessment and asked that an ombudsman review the case. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, however, I have reached the same overall conclusion as the investigator did, and for similar reasons. The loan was primarily for business purposes, and Ms P did not therefore have the full protection of the Consumer Credit Act 1974. Ms P signed a declaration at the end of the loan agreement to confirm that she understood that. The loan agreement also included, in capital letters at the beginning, a statement saying: THlS AGREMENT AND THE BANK’S FIXED RATE LOAN TERM TOGETHER FORM AN IMPORTANT CONTRACT. YOU SHOULD TAKE LEGAL ADVICE BEFORE SIGNING. Clause 1.5 of the loan agreement said:

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Under the Enterprise Finance Guarantee programme, the Secretary of State has agreed to provide the Bank with a Partial Guarantee subject to payment by the Customer of the Guarantee Fee as detailed in Clause 4.1 and the applicable Guarantee Fee Schedule issued in connection with the Loan. The Bank’s ability to provide the Customer with the Loan ls dependent upon the Bank receiving the Partial Guarantee. The Partial Guarantee ls given to the Bank and not to the Customer and the Customer remains liable for all sums payable under this Agreement in the event of default. A schedule to the loan agreement recorded that Ms P was to provide a charge over the leasehold interest in the business property. She engaged a solicitor to deal with that, but it is not clear whether she also received legal advice on the loan itself. The EFG scheme produced a customer information document. The bank’s notes record that this was discussed with Ms P, and it has also provided an extract of that document, which says: I/We understand that even though the government is providing a guarantee to the Lender in connection with my/our loan, I/We remain responsible to the Lender for the Loan and, in the event I/We default on the terms of the loan (for example, by failing to make the specific repayments), the Lender is entitled to seek to recover the full amount outstanding from me/us. Ms P’s signature appears below that statement, with the date 2 December 2017. A party which signs a legal document (which includes the loan agreement in this case) is generally bound by its terms, whether or not they have read them and whether or not they have received legal advice. And where an agreement has been recorded in a formal, legal document, it would be very unusual for that agreement not to be enforceable in accordance with its terms. NatWest was under no duty to advise Ms P on the terms of the agreement, although it did have to provide any information in a way which was not misleading. In my view, the statement that she should seek legal advice made it very clear that the bank was not doing so. In my view, clause 1.5 was clear in saying that the government guarantee was given to the bank, not to Ms P, and that she remained liable for all the loan payments. And that clause was not, as she has suggested, obscure small print; it was a key part of the loan agreement. It was also consistent with the information contained in the EFG literature which Ms P had seen and signed before she signed the loan agreement. The documents which I have seen include an email dated 26 January 2018 from the bank to Ms P. It says: The loan is a government supported loan which contains no liability as it is government backed and supported, you should have no worries whatsoever. Ms P says that this is evidence that the bank told her she would have the protection of the guarantee. I accept that it could bear that meaning and that it seems inconsistent with the loan agreement itself. But neither the bank nor Ms P has been able to explain the context in which that email was written – for example, by providing a copy the email or emails to which it is an answer or explaining what concerns it sought to address. In the circumstances, I don’t believe I can fairly conclude that it has the effect of negating or changing the meaning of clause 1.5. Nor can I fairly conclude that it was intended to mislead Ms P or that it did mislead her.

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Ms P says that she should not have been asked to provide additional security if the bank had the benefit of a government guarantee. I don’t agree. It isn’t unusual for a lender to take more than one type of security. And, if Ms P didn’t want to provide a charge over the business premises, she could have made that clear at the time. Ms P has also said that the structure of the EFG scheme is unfair and that this is why it was withdrawn. It is, however, not for me to comment on the overall fairness of the scheme and I make no comment on it. Finally, Ms P says that the loan was not affordable. But, as the investigator noted, that was not part of the complaint made to the bank and so it has not had a proper opportunity to consider it. Ms P may be able to bring that as a separate complaint, but I make no comment on it. My final decision For these reasons, my final decision is that I do not uphold Ms P’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms P to accept or reject my decision before 25 May 2026. Mike Ingram Ombudsman

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