Amigo Loans asks 4,000 borrowers why they voted against proposed rescue scheme

Borrowers of beleaguered subprime lender Amigo Loans have hit back after it sent them a survey asking them why they voted against its rescue plan.

Britain’s largest guarantor loan provider had its proposed cost-cutting scheme of arrangement rejected by the High Court last month.

The judge ruled it was unfair and that past and present borrowers, who could have been compensated just 5 per cent of what they were owed for mis-sold loans, were not properly informed about the proposals or any alternatives to them.

There are fears Amigo Loans could be on the brink after its proposed rescue plan was rejected by the High Court. It had said such a rejection could tip it into insolvency

He sent the company back to the drawing board, after the Financial Conduct Authority said it believed ‘a fairer scheme’ was possible, despite the company saying the scheme’s failure would likely tip it into administration.

The just under 4,000 borrowers who voted against the scheme were sent emails on Wednesday morning from Amigo’s chief executive Gary Jennison asking them several questions, including why they voted against the scheme.

Among the options provided to customers were ‘I did not believe it would give customers the best outcome for any compensation claims’, ‘I did not understand it’ and ‘I wanted Amigo to go into administration.’

Another of the questions was: ‘How do you feel about the objection of the court and the consequences of this? (Such as a further delay to receiving any compensation for customers who have a valid claim)’

Under the proposed rescue plan, Amigo was set to earmark a potential £35million pot to pay back borrowers mis-sold unaffordable loans. 

Given it had received thousands of complaints, nine in 10 of which were being upheld by the Financial Ombudsman, borrowers could receive as little as 5 per cent of what they were due.’

A 31 March tweet announcing voting on the scheme had been opened featured the tagline: ‘Vote FOR Your Money’.

The judge in the High Court case said ‘the creditors lacked the necessary information or experience to enable them properly to appreciate the alternative options reasonably available to them’.

The email to those who voted no added: ‘We previously said that without the scheme, we would likely go into insolvency. 

‘This means there would be no cash compensation available for customers who were mis-sold an Amigo loan. This situation is still a very real possibility.’

Amigo was criticised by regulators and then the High Court for failing to properly outline its rescue plan to borrowers 

In his judgment, Mr Justice Miles effectively accused the lender of fearmongering over this suggestion, stating: ‘It is unlikely that the directors would put the group straight into administration and destroy the substantial surplus value of the enterprise.

‘There is nothing in the evidence to suggest any imminent cashflow event that would force Amigo into insolvency.’

The subprime lender’s share price has crashed 72 per cent in the last month, ever since the FCA weighed in on 10 May to announce it would oppose the scheme in court. 

They crashed from 18.6p on 24 May to just 8.3p on the day the scheme was rejected a fortnight ago.

One borrower, who voted in favour of the scheme, wrote on the blog Debt Camel, where details of the email surfaced, it was ‘shocking that Amigo seem to be targeting people who voted no to the scheme.’

Another said: ‘I feel they have singled out everyone that voted against the scheme.’

A third added: ‘The questions are farcical and still looking to shift blame, I have been scathing in my response.’

Sara Williams, a debt adviser who runs Debt Camel, said: ‘The FCA said Amigo had not accurately described their situation and the proposed scheme to customers.

‘It is very disappointing that once again Amigo is now talking to customers without properly explaining things. 

‘I am not sure what the point is of asking customers what they think of the situation when those customers have not been properly informed about it in the first place.

‘These emails asking customers who voted for their thoughts have again emphasised that there would be no cash payouts in insolvency, but Amigo fails to mention that the 130,000 borrowers with a current loan would be able to get their balances reduced or cleared in insolvency if an affordability claim is upheld, so they would gain little or nothing from a scheme.’

Britain’s city regulator said Amigo’s proposed rescue scheme was unfair to borrowers who would have had the value of their compensation massively watered down 

Amigo said similar emails asking for feedback had been sent to the 74,866 creditors who voted no, as well as those who didn’t vote at all.

Amigo told the London Stock Exchange this morning it was continuing to consider all options and was in talks with the FCA ‘to identify an appropriate way forward’, including a more generous scheme for borrowers.

John Cronin, a financial analyst at the stockbroker Goodbody, said the uncertainty over Amigo’s future ‘could roll on for some time yet.’

An Amigo spokesperson told This is Money: ‘We have reached out to customers who voted both for and against the scheme to update them on what is going on and at the same time gather their views and inform our thinking as we determine our next steps.

‘We have always had an ongoing dialogue with our customers and this is not the first time we have sought to survey their views.

‘We want to hear from all of our customers and will also be reaching out to a sample of those who did not vote in the coming days, to gain a greater understanding of their reasoning.’

This post first appeared on Dailymail.co.uk