Amigo takes step towards lending again as court approves compensation for mis-selling victims
Beleaguered loans firm Amigo took a major step towards resuming lending today as it won High Court approval for a compensation scheme for customers that were mis-sold loans by the firm.
Amigo bosses confirmed this afternoon that the High Court had completed a hearing and the Judge would sanction a scheme that will see victims pocket at least £112m between them, with £15m raised from a share issue.
Amigo now needs to secure FCA permission to begin lending, but boss Gary Jennison said he was “pleased” with the court’s decision.
“We are pleased that the Court has decided to allow creditors the chance to maximise their redress payments from Amigo,” he said in a statement.
“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,” he said.
“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.”
Jennison said Amigo had developed new products to serve the market “in a responsible way” and said the firm had a valuable role to play.
The hearing comes after Amigo lent money to customers at interest rates of up to 49.9 per cent, plunging some borrowers into unmanageable amounts of debt.
Amigo were suspended ahead of the hearing today over concerns that market sensitive information could be leaked from the hearing.
City watchdog the FCA, which will now decide whether the firm can resume lending again, said the court-approved compensation scheme laid out by Amigo was an “improvement on last year’s failed proposal” and has the support of the Independent Creditors Committee, which was set up to protect the interests of those customers owed redress.
“We objected to Amigo’s previous scheme because we believed that a fairer compromise could have been offered to customers,” the watchdog said today.
“The FCA has, through its continued engagement with Amigo since the previous court hearing, sought to get a better, fairer deal for those customers due redress.”
The FCA said it will now 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 on-going,” the FCA added.