FCA to Challenge Amigo’s SOA

13th May 2021:

The Money Expert has reported, that the Financial Conduct Authority (FCA) will challenge Amigo’s Scheme of Arrangement and “rescue plan

The FCA has announced that it will oppose, in court, Amigo Loans Scheme of Arrangement, it’s rescue plan to save it’s business by limiting compensation payouts to customers who were mis-sold high-cost loans.

The Financial Conduct Authority has now written to Amigo in court saying it believes the scheme is unfair and will challenge it in court. This is a reversal in the regulator’s decision in March when it said it didn’t agree with Amigo’s proposed scheme of arrangement but wouldn’t oppose it.

Money Expert
The FCA has announced that it will oppose, in court, Amigo Loans Scheme of Arrangement

Who are Amigo Loans?

Amigo Loans is a UK based lender specialising in loans for people who are self-employed, have low credit scores, have County Court Judgments (CCJ) or who simply find it difficult to get a loan from other providers. The company offered loans to individuals at 49.9% APR and have drawn a volume of customer complaints over allegations of selling customer loans that they cannot afford.

Why have Amigo introduced a Scheme?

Amigo Loans are looking to introduce a Scheme of Arrangement, to settle customer complaints. In June 2020, it was reported that Amigo Loans reached a deal with the FCA to deal with a backlog of overdue cases, putting aside £35 million to settle 9,000 complaints.

Since then, Amigo has said that it will be unable to continue to pay refunds to customers who were given unaffordable loans, instead looking to introduce a scheme that will see customers receive around 10% of their anticipated refund value.

A Scheme is a mechanism that will require customer and Court approval, to enable us to fairly and equitably receive and consider all claims related to loans made by Amigo. The purpose of the Scheme is to secure a better return for Amigo’s customers than would be possible if Amigo went into insolvency. Should the Scheme not be approved by customers, Amigo will go into insolvency and unsecured creditors (including customers with claims for compensation) would receive nothing.

Source: Amigo Loans

Over a million Amigo Customers have been contacted about the scheme, including current customers and all previous customers whose loans have been repaid. On the 12th May 2021, there was news that suggested that the majority of customers have voted in favour of the Scheme.

The FCA has announced that it will oppose, in court, Amigo Loans Scheme of Arrangement

What happens if the Scheme is Approved?

If the scheme is approved, it would ensure that all customer complaints would receive something, however, it would not be the full amount that customers with a complaint are should receive. It is estimated that under the scheme, customers would receive 10% of what the original refund value under the scheme.

If the Scheme is Not Approved?

If the scheme is not approved, it is likely that Amigo Loans would be placed into administration or liquidation, resulting in no customer refunds or compensation.

I’ve had a loan with Amigo. What should I do now?

If you have already made a claim to Amigo Loans for a mis-sold loan, or are a current Amigo customer, you should have received details of the scheme via email or letter. Amigo Loans have also set up a website with details about the Scheme: https://www.amigoscheme.co.uk/

Whilst we wait…

In the meantime, whilst we wait for news on Amigo’s Scheme of Arrangement, either way, we will keep you fully informed and up to date.

If you have experienced being mis-sold another type of financial product, a Guarantor, Payday or Doorstep Loan, PCP Car Loan or Catalogue Card Credit, we can help. We want to help you get the compensation you deserve, before any other schemes pop up!

Submit your claim today!

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