Amigo Loans Receives Good News as FCA Says it will Not Oppose its Plans to Lend Again

The UK Financial Conduct Authority (FCA) has posted a letter indicating it was OK with Amigo Loans’ (AMGO.L) plans to compensate customers that has been apparently harmed while transgressing lending rules. A previous attempt to mollify regulators failed.  Amigo is a subprime lender that offers loans ranging from £2,000 – £10,000 over terms between 12 and 60 month.

In a statement by the FCA, the regulator explained:

“The firm’s Scheme 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. The Scheme is still being voted on by eligible customers. The FCA reserves the right to intervene if facts and circumstances change.

If the Scheme is sanctioned by the Court, the FCA has confirmed that the firm could resume lending if it meets certain conditions. These include meeting the threshold conditions and testing of the firm’s new lending system being completed to the satisfaction of the FCA.”

According to a report by the Evening Standard, the new scheme was a significant improvement over the prior as impacted customers will 41p on the pound versus the previous offer of just  10p on the pound.

As part of the process to engage with impacted customers, Amigo has set up a Facebook page as well as a website to share progress and information on the pending resolution.

Individuals have until 5 pm, 10 May 2022, to vote on the proposed new scheme.

If the new plan moves forward, Amigo estimates that it will have approximately £116 million in cash to pay creditors with a valid claim. If Amigo collects more money from its existing loan book than is estimated, or if it can contribute more than £15 million from issuing shares, Amigo will pay more.

Shares in Amigo rose higher on the news.

 



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