The scale of misconduct by Amigo Loans was laid bare after the Financial Conduct Authority (FCA) said it would have imposed a £73million fine were it not for the poor state the sub-prime lender was in.
It follows an investigation by the watchdog, which found poorly-designed IT systems with flaws in its assessment of affordability and creditworthiness.
It also prioritised its financial performance over the wellbeing of customers.
Probe: The Financial Conduct Authority said Amigo Loans had prioritised its financial performance over the wellbeing of customers
But while the watchdog had lined up a £73million fine, Amigo was merely censured as it would not have been able to pay it.
Mark Steward, at the FCA, said: ‘Amigo failed to assess properly the affordability of its lending, especially to vulnerable consumers. This led to lending that was unaffordable for some and meant guarantors had to step in.
‘It also had the effect of prioritising the firm’s commercial interests over the obligation to comply with the rules and safeguard customers from unaffordable loans.’
Amigo provides loans to people with a poor credit score if they have a friend or family member willing to make repayments if they are unable to. Thousands of customers said they received loans they were never able to repay.
The compensation bill ballooned and Amigo came up with a compensation scheme, well below the total bill estimated at more than £150million. Amigo said if it was forced to foot the entire bill it would have gone bust.
Last May, the High Court agreed a £97million compensation scheme for customers, conditional on it raising money and restarting lending.
It has since started lending, but is looking for a backer to inject £45million.
But if it does not find an investor by May, Amigo will shut.
Amigo boss Danny Malone apologised and stressed it was now under new management.
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