Huge high-cost lender with 500,000 customers to shut down and pay compensation to borrowers – see if you are affected
A HUGE high-cost lender with 500,000 customers is to shut down and pay compensation to borrowers.
Amigo Loans plans to wind down its business and halt all lending with immediate effect.
The business said it would not be able to meet the terms of a High Court scheme, which was intended to compensate customers.
Amigo has almost 500,000 customers, according to its website.
The business said that after exploring several options it had been forced to use its “fallback option” and would wind down the business and use the money to pay off customers who were due redress.
It means that customers who were due redress payments will lose out on the £15 million that Amigo hoped to raise from private investors.
But they will still get the rest of the compensation they have been promised.
Chief executive Danny Malone said: “This is a very sad day for all our employees who have worked extremely hard to address historic lending issues and rebuild a new Amigo, and for our shareholders and wider stakeholders who have supported us.
“It’s also a sad day for creditors due redress who will now receive a lower level of cash compensation than they would had the new business conditions been satisfied.”
Amigo specialised in subprime guarantor loans – the type where a borrower’s friends or family promise they will pay back the loan if the borrower cannot.
Customers would borrow at interest rates of around 50%.
Such loans are generally used by people struggling to borrow from other sources – but the lenders have a duty to ensure the people who borrow can still afford the loans.
According to a decision from the Financial Conduct Authority (FCA), the lender “did not have appropriate processes in place to ensure it adequately assessed borrower and guarantor circumstances before approving a loan” between November 2018 and March 2020.
“Amigo’s failures led to a high risk of consumer harm, both to borrowers and guarantors,” the FCA said.
The regulator said it would have fined Amigo nearly £73 million but decided not to because that would take away from the compensation customers would get.
The loans company was founded in 2005.
In March 2020, the firm’s founder claimed customers had been given “irresponsible” loans.
What are your rights?
Refunds or compensation are often given when the loan was mis-sold or where affordability checks weren’t stringent enough.
You can still claim, even if you’ve paid off the loan, if you struggled to make the payment at the time.
If the firm you borrowed from has gone bust, you should contact the lender’s administrator about getting a refund.
To make a complaint to Amigo, you should get in touch as soon as possible.
Send a short email to hello@amigoloans.co.uk with COMPLAINT as the subject.
Customers who were mis-sold loans at unaffordable rates had until February 28, 2022 to claim a share of a £50million compensation pot.
Thousands of 247Moneybox customers were also due compensation last year.