Credit, Collections & Insolvency News
Amigo Loans has been given a seal of approval from the Financial Conduct Authority (FCA) for a customer compensation claims scheme,
Shares in Amigo tumbled by 55% last May after the High Court stated that it was ‘not satisfied that the court should sanction the scheme’pushing back against Amigo’s original proposal to cap customer compensation claims.
The original scheme placed restrictions on borrowers’ compensation, and there were concerns that this would hit the poorest in society, resulting in criticism from MPs and campaigners.
In January, the company warned of collapse if the new scheme to pay back customers and restart lending is not approved.
The lender has announced plans to raise £97 million to compensate customers and £15 million to restart lending, warning that the company will enter a wind-down scheme or insolvency if it does not receive approval.
The FCA says since Amigo Loans’ last proposed Scheme of Arrangement was rejected by the High Court, the FCA has continued to engage with the firm and seek to get a better, fairer deal for Amigo’s customers due redress.
Ahead of the convening hearing on 8th March of Amigo Loans’ proposed Scheme of Arrangement, the FCA have written to the firm to confirm that we do not intend to attend the hearing to oppose its proposals. The firm’s Scheme proposal represents an improvement on last year’s failed proposal and has the support of the Independent Creditors Committee that was set up to advance the best interests of those customers owed redress. The proposal has not yet been voted on by eligible creditors (eg customers) and the FCA reserves its rights to intervene if facts and circumstances change.
The FCA has also confirmed that the firm could, subject to it meeting certain conditions, resume lending if its Scheme is sanctioned by the Court. The letter sets out the conditions the firm would need to satisfy to be able to return to lending, which include it meeting the threshold conditions, testing of the firm’s new lending system being completed to the satisfaction of the FCA and the firm addressing any other issues that may arise.
Gary Jennison, CEO of Amigo said “We thank the FCA for providing this level of clarity about its position on the proposed Schemes of Arrangement. There still remain significant hurdles to overcome before Amigo can deal with its insolvent balance sheet but this information will help us move forward to the next stage in delivering the best outcome possible, given the circumstances, for our customers, creditors and other stakeholders.”