Amigo, a leading firm known to lend money to those with a weak credit history, has reportedly stated that it is facing financial insolvency and has no plan to cap compensation for mis-sold loans. A scheme to put aside a separate money pot for compensation was rejected by the High Court one week ago.
Now the sub-prime lender has stated that it would not plea against the high court decision and was investigating for all the available options which includes insolvency or an alternative plan. Meanwhile, all compensation expenses remain on hold.
Currently, Amigo has 150,000 customers and around 500,000 past customers who are often short of money and are required to provide the name of a guarantor to come in to cover any repayments which are unpaid.
Amigo is known as the largest operator in the market however its future has been uncertain for quite some time, having also been involved in a boardroom battle. The firm stopped all novel lending in November.
Amigo, along with others in the sub-prime lending domain, has faced a number of complaints from consumers who thought that they had been approved for loans which they could not manage to repay. A number of these complaints have come through claims management corporations.
The watchdog stated that a loan is high-priced if making the repayments means somebody has to borrow more money or to support with essential bills.
The loan provider stated that it wanted to cap any incomplete or upcoming complaints in what is referred as a scheme of arrangement. This scheme was however opposed by the FCA (Financial Conduct Authority) and a judge stated that he was displeased with the scheme.
The firm stated that it will now work with the Financial Conduct Authority in the next few weeks. Amigo will also be postponing the publication of its results for the LFY.
Source credit: https://www.bbc.co.uk/news/business-57314517