21st Dec 2020 11:01
(Alliance News) - Amigo Holdings PLC on Monday said it will pursue the use of a scheme of arrangement, in order to attain certainty on the total liabilities which arise from customer complaints.
The Bournemouth-based provider of guarantor loans believes that a scheme will prove to be the best vehicle for addressing customer redress claims, but admitted that it would not allow all claims arising from unaffordable lending to be paid in full.
The scheme is expected to commence as soon as possible in 2021 and is subject to the approval of creditors, the UK Financial Conduct Authority as well as court sanction. Amigo has already made an application to the FCA for a Dispute Resolution: Complaints Sourcebook waiver to suspend complaint handling.
To allow for equal treatment of customers, Amigo will stop the ongoing payment of all claims, except for claims where a final response letter has been issued to the customer, or where the complaint has been referred to the Financial Ombudsman Service.
Amigo expects an immediate cash payment under the scheme towards the Redress Claims Pool to be GBP15 million, with an option for this to increase should the anticipated balance adjustments be less than expected, up to an extra GBP20 million.
In addition, the group will make a cash contribution to the scheme based on 5% for the next three financial years ending March 31, 2024.
"Together with the board of Amigo, I believe that a successful scheme of arrangement will provide certainty to the total liability arising from customer complaints. This scheme is intended to give a fair outcome for all our stakeholders, taking into account creditor priority rankings and will allow the company to return to lending," said Chief Executive Officer Gary Jennison.
"We provide vital financial inclusion to millions of borrowers in the UK unable to access mainstream credit, which will become even more important as the UK recovers from the economic impact of Covid-19," Jennison added.
Shares in Amigo Holdings were down 5.7% at 8.51 pence on Monday in London.
By Dayo Laniyan; [email protected]
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