Amigo could restart lending within year as court prepares to rule on proposals
The Financial Conduct Authority said that it would not oppose the proposals.
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Your support makes all the difference.Troubled lender Amigo could start lending again within a year if proposals to compensate customers for unaffordable loans are adopted this week.
The City watchdog said that it would not oppose the proposals, due to be heard in court on Tuesday, and could let Amigo start lending again nine months after they are adopted.
But Amigo would only be allowed to restart lending if it fulfils a series of criteria, the Financial Conduct Authority (FCA) said.
These include having the resources to restart lending and the firm’s new lending system passing a test.
There still remain significant hurdles to overcome before Amigo can deal with its insolvent balance sheet but this information will help us move forward to the next stage in delivering the best outcome possible, given the circumstances, for our customers, creditors and other stakeholders
“We would expect any return to lending to be limited in volume and for the firm to demonstrate to the FCA (with third party assurance where appropriate) that it was lending in a way that meets the FCA’s expectations in respect of the firm’s regulatory obligations before it sought to increase the volume of lending, and would continue to meet those standards in the future,” the authority said.
Amigo has paused lending for years as it works through a backlog of allegedly unaffordable loans.
It has warned several times that it might go out of business, not least after a court rejected a separate set of proposals – called the schemes of arrangement – on how it would compensate customers.
Amigo said at the time that it faced possible bankruptcy as a result.
On Monday its chief executive, Gary Jennison, said: “We thank the FCA for providing this level of clarity about its position on the proposed schemes of arrangement.
“There still remain significant hurdles to overcome before Amigo can deal with its insolvent balance sheet but this information will help us move forward to the next stage in delivering the best outcome possible, given the circumstances, for our customers, creditors and other stakeholders.”