Amigo Loans to stop lending after failing to raise funds for compensation | Financial sector


The sub-prime lender Amigo Loans is to be liquidated after it failed to raise enough money to fund compensation to customers.

After months of trying to come up with a rescue plan, Amigo said it would stop lending with immediate effect and be placed into an orderly wind-down, with all surplus assets to be transferred to the creditors of its compensation scheme. The shares crashed 75% to 0.4p on the news.

The wind-down is expected to take about 12 months. The firm specialises in providing credit to people who are excluded from mainstream banks.

The liquidation means that those owed compensation by Amigo will receive less or nothing, while shareholders will be wiped out. Amigo said it had not received enough interest from potential equity investors to raise the required £45m to keep going.

The firm said: “There will be an impact to the total compensation scheme creditors will receive in terms of pence in the pound as they will not receive a share of the minimum £15m scheme contribution that was to be raised from investors.”

Danny Malone, the chief executive, 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.

“We have fought hard to deliver the best outcome for creditors, colleagues and shareholders and have left no stone unturned.”

The loan book will continue to be collected during the wind-down and employees will continue to be paid, the company said. It employs fewer than 200 staff.

skip past newsletter promotion

Amigo escaped a £73m fine last month despite having put consumers at a “high risk” of harm, as the Financial Conduct Authority feared the penalty would cause its collapse.

The watchdog’s investigation found Amigo put business interests before those of its customers, by failing to assess properly whether customers, or their guarantors (often friends or family members), could afford to repay the loans they applied for. The FCA estimated that one in four guarantors were forced to step in and make payments on loans issued between November 2018 and March 2020 as a result of Amigo’s failings.

Source link

Denial of responsibility! NewsConcerns is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Leave a comment