Amigo Loans could start lending again after the financial services regulator said it would not oppose its current plan to compensate customers.
Since late 2020, the embattled firm has been unable to lend money after a deluge of complaints that Aimigo had sold loans to borrowers who could not repay them and has not undertaken the necessary affordability checks.
Aimgo initially proposed a compensation package that would have capped payouts at £35million and 15 per cent of its profits over four years, but this was resolutely rejected by the High Court last year.
No lending: Since late 2020, Amigo Loans has been unable to lend money after a deluge of complaints that it had sold loans to borrowers who could not repay them
But in a sign the embattled lender may have turned a significant corner, the Financial Conduct Authority (FCA) has said Amigo’s latest proposal – known as a ‘Scheme of Arrangement’ – ‘represents an improvement’ on last year’s offer.
It also said an Independent Creditors Committee set up to represent the interests of aggrieved customers approves of the scheme.
A hearing at the High Court is due to take place tomorrow to decide whether to accept the proposal, which the FCA does not plan to attend.
But, even if the scheme is given the thumbs up by the court, the subprime lender will still need to fulfil certain threshold conditions set by the FCA, which has the power to intervene should the circumstances change.
Amigo must also have its new lending system tested and satisfactorily deal with any other matters that might arise while its customers have yet to vote on the proposal.
Only when the FCA believes that all conditions have been sufficiently met will Amigo be allowed to start lending within nine months after the plan is adopted.
Amigo’s chief executive Gary Jennison said: ‘We thank the FCA for providing this level of clarity about its position on the proposed Schemes of Arrangement.
‘There still remain significant hurdles to overcome before Amigo can deal with its insolvent balance sheet, but this information will help us move forward to the next stage in delivering the best outcome possible, given the circumstances, for our customers, creditors and other stakeholders.’
Amigo Loans shares more than doubled to 6p this morning following its update, though the firm’s troubles over the last two years have been so severe that its shares remain almost 99 per cent below their value in mid-2019.
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