Amigo borrowers one step closer to redress
The High Court has today completed its hearing and the judge confirmed it will sanction Amigo’s new business scheme.
This means Amigo could resume lending (subject to Financial Conduct Authority approval) and see cash returns to creditors at an estimated 42p per £1 of claim.
Amigo redress scheme details
Today’s update is one in a long line for Amigo borrowers. It all started in 2018 when Amigo began receiving affordability complaints and mis-selling concerns. Where a customer’s complaint was upheld, Amigo was ordered to refund the interest paid or update the outstanding balance.
However, with an influx of compensation claims, Amigo faced collapse and so in May 2021, it published a rescue plan which was rejected by the High Court for being ‘inherently unfair’.
In December 2021, Amigo proposed two new alternative redress schemes, with both options seeing affected borrowers receive less money than owed.
But in March 2022, the regulator, the Financial Conduct Authority confirmed it wouldn’t oppose Amigo’s scheme of arrangement proposals.
Earlier this month, a creditors meeting took place where borrowers voted on the two alternative redress schemes. A majority total of 145,532 votes were in favour of Amigo’s preferred ‘new business scheme’.
In order for the new business scheme to go ahead, it required sanction by the High Court which has now reached its decision.
‘Drawing a line under the mistakes of the past’
Gary Jennison, chief executive officer of Amigo, said: “We are pleased that the Court has decided to allow creditors the chance to maximise their redress payments from Amigo. While we must secure the FCA’s permission to resume lending and raise fresh capital, the Court’s ruling is good news for creditors, customers and employees, and it takes us a step closer to delivering compensation as well as drawing a line under the mistakes of the past.”
Jennison added: “A successful new business scheme will open the door to a fresh source of responsible, regulated finance for millions of people in this country who don’t have access to mainstream banking. We have developed new products to serve this market in a responsible way and believe we have a valuable role to play.”
The FCA said it will continue to monitor Amigo closely as it launches the scheme and seeks to meet the conditions for it to resume lending. “Our investigation into the firm is ongoing,” it added.