Adios Amigo? Lender’s rescue plan shot down
AMIGO faces collapsing into insolvency after the High Court rejected its plans to cap compensation for mis-selling victims at 10p in the pound.
Shares in the guarantor lender were slashed in half yesterday following the court decision.
Mr Justice Miles sided with the Financial Conduct Authority, which opposed Amigo’s rescue plan. The FCA said it unfairly penalised victims, while leaving the lender’s shareholders and others untouched.
Amigo had warned that without the scheme it will go bust, leaving those mis-sold loans with nothing, but Mr Justice Mills again agreed with the FCA. The regulator believes rejecting the plan will not lead to immediate collapse.
He added: “The FCA expects the directors to continue to explore and promote a restructuring which fairly allocates the benefits and losses.
“I agree with that, and would urge the directors to continue their efforts to promote a suitable restructuring.” The FCA in a statement labelled the Amigo plans as “inherently unfair”.
It added: “The FCA believes that Amigo can propose a fairer scheme to customers. It should also ensure that its customers are fairly represented and advised on alternative proposals.”
Amigo boss Gary Jennison said: “We are incredibly disappointed that the scheme has not been approved despite the 74,877 customers who voted in support, representing over 95 per cent of those who voted.”
He said they are reviewing all options and will give “an update at the earliest opportunity”.
The lender, which typically charges 49.9 per cent interest, offers loans to borrowers with poor credit histories on the basis that they have a friend or family member act as a guarantor.