Amigo Loans announces closure after rescue plan failure

Sub-prime lender Amigo Loans is to be liquidated after months of trying to come up with a rescue plan ended in failure.

The company said  Amigo said it would stop lending with immediate effect and will be placed into an orderly wind-down, with all surplus assets transferred to the creditors of its compensation scheme. Those owed compensation will receive an estimated 17p in the pound.

The loan book will continue to be collected during the wind-down and employees will continue to be paid, the company said. Amigo employs around  200 staff.

The Financial Conduct Authority publicly censured Amigo earlier this year over failures in assessing borrower and guarantor circumstances, which led to a high risk of consumer harm but spared the firm a £72.9 million fine on the grounds it would prevent the firm from paying out compensation to customers.

Danny Malone, Chief Executive, said “This is a very sad day for all our employees who have worked extremely hard to address historic lending issues and rebuild a new Amigo, and for our shareholders and wider stakeholders who have supported us. It’s also a sad day for creditors due redress, who will now receive a lower level of cash compensation than they would had the new business conditions been satisfied.”

“We have fought hard to deliver the best outcome for creditors, colleagues and shareholders and have left no stone unturned.”