Amigo Loans was censured and fined by the City for not conducting proper affordability checks of borrowers and guarantors. However, it was allowed to pay a nearly £73 m penalty due to its financial problems.
According to the Financial Conduct Authority (FCA), Amigo would have been subject to a £72.9m penalties, but this would have resulted in serious financial hardship for the lender.
The High Court-sanctioned scheme of arrangements was also sanctioned by Amigo, which meant that Amigo would not be able to pay customers compensation.
According to the FCA, Amigo did not have adequate processes to evaluate the affordability of borrowers or those acting as guarantors.
According to the FCA, this led to “high-risk consumer harm” for both guarantors and borrowers.
Amigo stated that the FCA probe’s closure marks an “important milestone”, for both the company and the sector.
It stated that the company had reached this milestone because it acknowledged the FCA’s time and resources to review its history and identify customer harm.
“At a larger level, the results of the investigations and the contents of the final notice will, according to us, provide useful guidance for both Amigo as well as all other firms that provide credit to customers not readily able to access the services the main credit providers.”
Danny Malone, chief executive officer of Amigo, said:
I apologize to all customers who were affected by the past failures in lending practices during 2018-2020.
We are a new board and management team and we accept all the lessons learned. Our focus is on building a business that delivers better results for customers and is backed by stronger lending controls, better culture, and better customer service.
This investigation has concluded and we can draw a line under the historic lending issues. We are now able to secure the capital needed for the future.
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