Amigo Loans was one of the UK’s largest guarantor loans providers, who came under fire in 2020 for not providing the proper affordability checks on those who applied for the loans and their guarantor. When the news was released about the checks, thousands of applicants submitted a complaint in the hopes of being granted an equitable set off. At the time, Amigo stated they were unable to repay everyone who had been sold an unaffordable loan and applied for a ‘Scheme of Arrangement’.
Amigo Loans Scheme of Arrangement
The arrangement puts a cap on the amount Amigo had to pay to each customer who was eligible for equitable set off. Amigo’s first scheme was rejected by the FCA (Financial Conduct Authority) as they felt it benefited shareholders immoderately and was, as a result, unfair to customers.
The second scheme proposed by Amigo was approved in May of last year, as it was set to raise equity from its shareholders, which in turn will be used to refund claimants. A time limit was imposed upon this which stated that if the full amount of £15m was not raised by March 26th 2023, the scheme would move to a ‘Fallback Option’. On March 23rd, Amigo announced they have been unsuccessful in raising the money needed and therefore the scheme will move towards the Fallback Option, with the company as a whole going into ‘orderly wind down”.
How does this impact your finances?
As Amigo were unable to build up their equity, there is less money available to pay their consumers. This has meant that each claimant will now be receiving less in their refund than originally proposed. The earlier proposition stated that customers would receive 41p for every pound, this has now become 17p for every pound of compensation due.
It has been announced the first payments will remain on time, and are still scheduled for September of this year. However, an update on the Amigo website states that the second payment will now be expected to land in banks in May of 2024, as opposed to November 2023. Nothing else about the scheme is changing.
If you have any questions regarding your claim with Amigo, visit their website to see FAQs and find contact information.