Amigo Loans gets FCA approval to return to lending

It comes more than two years after the guarantor lender suspended its lending activity to all but key workers in March 2020 - ceasing lending altogether in November 2020. Following this, the firm received a significant number of customer compensation claims relating to past lending standards. 

Subsequently, in May 2022, Amigo received High Court approval for a New Business Scheme of Arrangement after a previous proposal was rejected. The new scheme will facilitate the payment of compensation to creditors, conditional on regulatory approval for a return to lending and the completion of a capital raise. 

If these conditions are not satisfied by 26 May 2023, Amigo will go into run-off and will be wound down. 

The firm is returning to the market with two new loan products - namely a personal loan and a guarantor loan. The personal loan starts at 49.9% APR while the guarantor product begins at 39.9% APR, with both products offering the borrower the opportunity to reduce the interest rate charged over time to the equivalent 34.9% APR by making payments on time. 

These products will be marketed under the RewardRate brand - with no new lending taking place under the Amigo brand. The name will continue as part of a regulated lending entity, Amigo Loans Ltd, as well as the listed holding company Amigo Holdings PLC. 

However, no pre-March 2020 loan products will be sold again, with the legacy book continuing to run off. 

In a letter to the company from the FCA, it confirmed that it’s satisfied Amigo has met the threshold conditions required for it to return to lending, initially through the operation of a pilot lending scheme, which would limit the new loans issued for a least two months. 

According to the firm, the regulator’s decision to approve a return to lending is an “important milestone” for those owed redress as it meets one of the two scheme conditions which must be fulfilled. 

Amigo’s chief executive Danny Malone said: "We return to lending with FCA approval as a changed company in terms of our values and the way we operate with a focus on supporting financial inclusion and mobility for customers. 

“Our new RewardRate product set has been designed with this in mind and once the trial phase is complete, we believe it will be an important new entrant to the mid-cost regulated market.

"A successful pilot will also move us a step closer to paying out compensation to redress creditors under the terms of the Court sanctioned Scheme of Arrangement. Together with our advisers we are working hard on meeting the final condition, namely a successful capital raise by May 2023."