Customers mis-sold loans by Amigo will get a ‘markedly better’ payout as the beleaguered lender closes in on a new redress scheme.
Amigo was forced to go back to the drawing board earlier this year after the High Court threw out its proposal to give borrowers a fraction of the compensation they were due.
The company is now preparing to come back with a second scheme offering them a bigger lump sum.
Unfair: Amigo was forced to go back to the drawing board earlier this year after a court threw out its proposal to give borrowers a fraction of the compensation they were due
Amigo said that the ‘significantly increased’ payout was possible because more people had kept up their loan repayments during the pandemic than expected.
But the firm repeated its earlier warnings that it would go bust if the scheme is not approved by the Financial Conduct Authority (FCA) and the court.
Amigo, which has had to pause lending as it sorts out the historical redress issues, also said its business was dependent on going cap in hand to investors for more money towards the end of next year.
The firm lends money to those with a poor credit score, as long as they have a friend or family member – a guarantor – willing to pick up the bill if they can’t.
But it fell foul of regulators last year when rule changes surrounding affordability checks meant thousands of customers could claim they had been mis-sold their loans.
It now has a complaints bill of £344.3million, which it cannot cover.
Amigo made a profit of £2.1million, in the six months to September, up from a loss of £62.6million last year.
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