Credit Cards & Loans
Amigo proposes two options for borrowers mis-sold loans
Amigo has proposed two new alternative redress schemes, with both options seeing affected borrowers receive less money than they are owed.
One scheme would see affected borrowers get back just 29p per £1 owed, and the other 42p per £1 owed. Both payouts are only predictions at this stage based on the number of claimants owed money and the average amount owed. The proposals come as Amigo faces collapse as a result of a massive multi-million pound compensation bill for wrongly sold loans. When looking to smart and fare loans you can take, see here the commercial hard money loans virginia.
Amigo started to receive increasing numbers of complaints in 2018. Many of the complaints centred around affordability and mis-selling concerns. Where a customer’s complaint is upheld, Amigo must refund the interest paid or update the outstanding balance. However, it cannot afford to pay all the compensation claims in full. The sub-prime lender is not offering loans at the moment.
The High Court rejected a rescue plan put forward by Amigo in May. Before that the Financial Conduct Authority (FCA) had already opposed Amigo’s ‘scheme of arrangement’ which the company proposed under part 26 of the Companies Act 2006.
Before either of the two new proposed schemes get the go-ahead, they will need to be approved by the High Court, which is expected to take place in February 2022. Borrowers are then expected to need to vote on their preferred scheme in April 2022.
Amigo’s first option is a ‘new business’ scheme where claimants are predicted to get back 42p of every £1 they’re owed. This is Amigo’s preferred scheme, because it will stay in business. However, to do so it will need to be able to re-start lending within nine months of scheme approval. It will also need to raise £70m in the first 12 months of operating.
If these two conditions aren’t met, Amigo will automatically revert to option two which is a ‘wind-down’ scheme where claimants are predicted to get 29p of every £1 they’re owed. This scheme will eventually result in Amigo shutting down.
Full details of both schemes can be found on Amigo’s website. Complaints with Amigo are on hold until a redress scheme is approved.
