Update: 01 June 2021
The proposal to set aside a pot of money for compensation of Amigo was discarded by the High Court a week ago. Amigo has said it will not appeal against the decision but will rather investigate alternative options including a different type of plan or even insolvency. Whilst this occurs, all compensation payments remain on hold.
BBC News report more.
20 May 2021
AMIGO Loans is likely go into administration and leave 70,000 complainants with no compensation, unless the company is allowed to put a cap on compensation payouts, its lawyers have argued in the High Court.
The Court is assessing whether a Scheme of Arrangement should be approved as a way of paying some compensation. Such a scheme is covered under part 26 of the Companies Act 2006 in relation to the group’s redress claims. Using the scheme would mean that customers who are owed money due to being mis-sold a guarantor loan will not be paid in full.
The subprime lender started to receive increasing numbers of complaints in 2018. Where a customer’s complaint is upheld, Amigo must refund the interest paid or update the outstanding balance.
Many of the complaints centred around affordability and mis-selling concerns. The FCA has been investigating Amigo over the way it assessed customers’ ‘creditworthiness’.
Its plan is opposed by the Financial Conduct Authority (FCA), which says the proposals would unfairly protect shareholders at the expense of people with compensation claims.