Amigo Loans’ previous plan was rejected by the High Court in May last year
(Picture: Amigo)Subprime lender Amigo Loans is a step closer to survival after the Financial Conduct Authority confirmed it will not oppose the company’s latest rescue plan.
The FCA said it will not go to court to object to Amigo’s new proposals, “which represents an improvement on last year’s failed proposal and has the support of the Independent Creditors Committee, which was set up to advance the interests of those customers owed redress.”
Under new plans, vulnerable Amigo Loans customers who were mis-sold loans could receive up to 41p in the pound in compensation.
The controversial sub-prime lender had its previous plan to compensate customers, called Schemes of Arrangement, thrown out by the High Court last year after the FCA objected to the amount people would receive. Amigo offered just 10p in the pound.
Today, the company said there had been “a significant improvement in the fairness of the schemes” thanks to an improving financial picture and some cost savings within the business.
Its new plan states that if Amigo is allowed to start lending again, it could pay out 41p in the pound from a potential £116 million cash pot. This is its “preferred solution,” it said.
If the business is wound down instead, former customers will receive between 33p and 37p in the pound. Money would come from interest on pre-existing loans but not any new cash.
In the event the company is put into administration, customers will get just 31p in the pound.
The FCA said it would not appear at the latest sanction hearings either to oppose the schemes or to present any evidence, unless the court requires it to.
Gary Jennison, CEO of Amigo said: “These confirmations are positive steps towards delivering the best outcome possible, given the circumstances, for our customers, creditors and other stakeholders.”
Plans must now be approved by mis-sold customers. Amigo customers who think they took out a loan or became a guarantor when they couldn’t afford it are able to vote on the new proposals, either online or during a creditors’ meeting being held next month.
