UPDATES
Amigo’s Scheme of Arrangement was rejected by the court in May after it was opposed by the FCA as unfair to customers and too generous to shareholders. See Court rejects Amigo Scheme for details.
Amigo is working on a second Scheme but this is going very slowly.
I have summarised the recent Amigo results (they now have PILES of cash) on 29 September in Amigo – no second Scheme before April 2022 at the earliest.
This page will be updated when there is news for customers.
Amigo now says people who have made a complaint can stop paying if they have paid more to the last loan than they borrowed, and they won’t ask the guarantor to pay
See Amigo will now let people stop paying – the right of Equitable Set Off for details about this.
If Amigo says you are not eligible for it, I think this is unfair but you can’t make them change their mind. So you should consider the pros and cons of stopping paying Amigo anyway.
The approval process for the first Scheme – this ended in rejection
On 30 March, the First Court Hearing gave the go-ahead for Amigo to organise the creditor voting.
An online page to vote was set up and a creditors’ meeting held.
The FCA has published a letter saying:
The FCA considers that a fair compromise could have, but in this case has not been, proposed to Scheme Creditors to vote upon. Therefore… the FCA has decided that it intends to appear at the Sanction Hearing through counsel to oppose the sanction of the Scheme, even if approved by the requisite majority of Scheme Creditors, on the basis that the Court cannot be satisfied that the Scheme in its current form is fair.
On 19 May the Second Court Hearing took place. The FCA opposed the Scheme going ahead
On 24 May the judgement in the case was published – the judge accepted the FCA’s arguments and did not approve the Scheme.
An overview of the first Scheme as it was proposed
Amigo is proposing a Scheme because it can’t afford to pay refunds to all the customers who were given unaffordable loans. It says it will go into administration if the Scheme is not approved.
Amigo says customers may get a cash refund of about 10% of their proper refund value. I think the amount may be lower.
Customers with a current loan, however, will be able to have the full amount of their refund deducted from their balance and their guarantor released in the Scheme if Amigo upholds their claim. And they can also get this if Amigo went into administration if the administrators uphold their claim.
About a million Amigo customers have been texted or emailed about the Scheme. This includes current customers – the borrowers and guarantors for the current 137,000 loans – and all previous customers whose loans have been repaid. If you haven’t received an email about this, check your spam folder!
Amigo has set up a website with information for customers about the Scheme. This contains the Practice Statement Letter (PSL) which sets out more details. And a longer Explanatory Statement.
If the Scheme starts, all open FOS cases will be sent back to the Scheme.
Under the Scheme, customers can put in a claim if they have affordability complaint or if they have any other complaint about a loan or the way Amigo treated them.
There will be a six month period for these claims to be sent in after the Scheme start date. After that time you will not be allowed to make a claim in the Scheme and will not be able to take a complaint to the Ombudsman either.
Amigo will decide whether to uphold each claim:
- The Explanatory Statement lists a lot of factors that will be taken into consideration in Schedule 4.
- Will Amigo uphold the same very high rate that the Financial Ombudsman (FOS) does? It has not said this.
- Amigo will appoint an independent person to look at any appeals – you can’t go to the Financial Ombudsman.
Amigo will then calculate the redress (the legal term for the refund you would have received if there wasn’t a Scheme) for the claims it upholds:
- for borrowers this is the interest they paid.
- it seems likely Amigo will be applying the “unpaid interest deduction” that it started making in summer 2020. This will reduce people’s refunds, see Amigo should end unpaid interest deductions and remove CCJs for details.
- guarantors the calculated refund will be a refund of everything they have paid.
- where a guarantor is being paid a refund, the guarantor payments are removed from the borrower’s account. If the borrower has also had a Claim upheld, interest will be removed from the borrower’s account. A borrower won’t be left worse off after this, but they may get little or no refund.
If you have a balance still owing to Amigo:
- your balance will be reduced by the refund;
- if you still owe a balance after this reduction, you can make an arrangement to repay it at a more affordable rate and your guarantor will be released;
- if the refund is larger than the balance this extra will be paid from the pot of cash Amigo is putting aside and you will only get a small percentage of it.
If you are owed a cash refund:
Customers whose loans have been repaid will have their cash refunds paid out of the pot of money Amigo is putting aside for this. But there won’t be nearly enough money to pay full refunds.
The pot will be divided up between all the people who are owed a cash refund who will all get the same “pence in the pound” percentage of their proper redress.
Amigo is putting in £15m, which could be increased by up to £20m if the balance reductions are lower than expected – this sounds unlikely to me. Amigo is proposing that it will add 15% of its profits in the next four years into this refund pot. As Amigo is currently loss-making this sounds like some jam in a few years, or possibly none at all.
Amigo says people may get paid 10% of their proper refund in the Scheme. On my figures, it could be even less, possibly as low as 5%.
Amigo expects the first payments to be made in the first half of 2022. It may be late in that period as Amigo has to allow time for any appeals to be made and reviewed.
Rob says
Hi Sara,
Can you advise how one should now put in a complaint to amigo? I’m trying to help my sister out with her debt issues and have been working with her drafting letters but I cannot now see how to complain to Amigo. This site says that that you cant email and you have to go through the scheme but the scheme obviously hasn’t been setup yet and I’m just at a loss. I checked Amigos complaints page but the language there seems to imply that you cannot make complaints re unaffordability and it only mentions how you can potentially reduce payments if your income has reduced. Any help you can give would be great as this was beyond unaffordable for her – the loan is approx 45% of her take home pay
Thank you.
Sara (Debt Camel) says
Was this loan unaffordable for her when the loan was taken out? A loan is only affordable if it is likely the borrowetr can make all the loan repayments and still be able to pay their other debts, bills and everyday living expenses. If she could only gte by by borrowing more or getting deeper into her overdraft then it probably wasn’t affordable,
Complaints can be sent to hello@amigoloans.co.uk – put AFFORDABILITY COMPLAINT as the title of the email.
You may as well keep this short as Amigo will not consider it until the Scheme is underway.
How much did you borrow and how much has she paid to the loan so far? Total of cash payments, ignore whether Amigo says they were capital or interest.
Who is her guarantor?
Rob says
Hi Sara, thanks for coming back to me. Shes only recently approached me for help and unravelling everything is proving tricky.
On the face of it it looks very unaffordable to me. She’s a single mum of two kids earning £1000 after tax each month and this loan was £396 per month. This was her fifth amigo loan and it looks like each one was a top up. This one was a loan value of £10,000 of which £8,300 was to pay off the previous loan. Shes had a history of late payments and defaults both on her previous amigo loans and other loans she had at the time. She had multiple payday loans as well when this was taken out.
Ive put in a letter asking that she exercise her right to equitable set off. Shes paid around £12,500 in interest so far with £9800 remaining as the outstanding balance and also offered to settle any affordability complaints from all 5 of her loans in return for the outstanding balance on this being written off – hoping that might speed things along.
Her guarantor is a friend from work, she had hidden this all from her family until its got to the point where she just cannot see a way out as she still has at least 4 years left on the loan.
Thank you.
Sara (Debt Camel) says
Anyone with several top ups usually has a VERY good case for an affordability complaint. And if she had a poor payment history that makes her complaint even stronger.
If Amigo will let her have what it calls “Equitable Set Off” then they will agree to her pausing paying and will not go after her guarantor.
But if Amigo refuse, then she needs to consider talking to her guarantor about the whole situation and whether she should stop paying, see
https://debtcamel.co.uk/stop-paying-amigo-pros-and-cons/.
Does she have any priority debts – rent arrears, council tax arrears, behind with energy bills etc?
rob says
She was considerably behind with her Rent (council property) which family helped her to clear 2 months ago as it got down to the deadline for eviction as she had almost £10k in arrears. We arent able to help her financially with the rest so Ive been trying to help her make payment plans / other arrangments. Shes on a prepaid meter so no utility bills.
Sara (Debt Camel) says
Does she have other loans, credit cards, catalogues, overdraft debts?
A says
Hi Sara
Is there any word of the new scheme yet for Amigo.
Sara (Debt Camel) says
No!
There will be a quarterly update on Amigo’s finances at the end of this month – it will be interesting to see what their cash balance is and how much secured debt has been repaid. The way the FCA has allowed them to stop complaint payouts means they must be generating large amounts of cash. Which should mean that a lot more is available in a second Scheme for redress payouts. I am surprised Amigo is letting this drag on.
Timing-wise, 8 weeks is a pretty tight timetable from the announcement of the Second Scheme to get through the 1st court hearing, voting, and second court hearing. And with Christmas, at a guess any Scheme can’t be live much before end January.
A says
Thank you Sara for your reply. As per usual, we just have to wait.
DM says
Hi Sara, what’s your thoughts on the FCA approving a revised scheme with the continuation of deductions for unpaid interest, as could be additionally detrimental to any of us that still have outstanding balances after multiple top ups where otherwise the balance would be cleared? If there is an agreed pot for payouts however small, it would still leave a lot of people with outstanding balances Amigo will benefit from or alternatively if they removed this element in the calculation for a more efficient cost in calculation /administrative costs but deduct from the pot, would this reduce % payments for those who have cleared their balances. Which do you think would be considered as fair by the FCA?
Sara (Debt Camel) says
I don’t even know how much the FCA is aware of the deductions for unpaid interest issue. i would hope they are and that they see it is unfair as it goes against the approach FOS takes.
How much money is there for refund is largely irrelevant here. This deduction should be banned if there is no cash for refunds or a lot.
sean mcconkey says
regarding complaints taken by the ombudsman’s will our cases automatically get picked back up once amigo have sorted what they are doing or will we need to go through amigo again
Sara (Debt Camel) says
We will have to wait and see the details for how the new Scheme will work – I could guess but there isn’t any point!
Marianne says
I had my final compensation letter from the ombudsman back in March saying that I had been irresponsibility given the loan. Will this still stand regards compensation.
Sara (Debt Camel) says
was this from an adjudicator or a final decision from an Ombudsman?
do you still owe a balance on the loan?
was your case being given priority at the ombudsman?
Chantelle says
Hello Sara, I took out a £2000 loan Dec 2018 – I requested a top up of £3000 due to a car issue, so they settled the old loan and my new balance was £5000 in May 2019, monthly payments of £245 which I have since paid in total since the new top an amount of £5366.90 and on my account it states I have a balance of £3415 left to pay. I complained to Amigo in May 2020 and they responded in Dec 2020 to say not upholding complaint as they have done their checks. They made a statement to say “For Loan 2 your monthly income was verified by a 3rd party credit reference agency on the figure of £2365” (This income figure was wrong I didn’t get a monthly income of that amount) therefore it cannot have been verified. They’re next statement was we checked for defaults within 6 months prior of you applying for the loan and there were none. Again this was a lie as I have checked my credit reports and I had multiple. I tried to appeal it (with all of my proof) in May 2021 but they wrote back saying they had already investigated my complaint and issued a final response and there is no longer an active complaint. I then forwarded the complaint to the F/O and has a response in Aug 21 talking about the scheme and said “ We have therefore made the difficult decision not to take your complaint any further forward at this time.
Sara (Debt Camel) says
So I hope you will be able to submit a complaint to the new Scheme when it is set up. At the moment we do not know what the criteria are for you being able to submit a complaint.
Sean says
Has the whole financial world forgot about Amigo.
No website has a clue what’s going on.
No update in months.
No major platform putting pressure on them.
It all seems as though it will just fizzle out.
Its becoming obvious they are dragging heels to line pockets.
Bruno says
There will be an announcement tomorrow at 7am UK time to release their half year results. There may be an update on where the negotiations are progressing with the schemr etc.
The last update in the AGM meeting showed positive collection figures and revealed they had just sent a new scheme to be reviewed.
Let’s wait and see what tomorrow brings
Sean says
Hi Sara,
I made a complaint to both Amigo and FOB back in February. Nothing I have ever heard since.
What should I do? I am the guarantor of a loan that I ended up in paying out. I am trying to get my money back arguing I shouldn’t have been a guarantor in the first place.
Thanks
Sara (Debt Camel) says
You have cleared the loan?
In that case there is nothing you can do at the moment. there is no way to make Amigo look at your complaint.
And if a second scheme goes ahead, you will probably only get back a small percentage of what you paid Amigo.
Sean says
Yes I had to pay it in full.
I see this has been discussed before but would they then consider the loan “not paid” if they compensated me?
Sara (Debt Camel) says
In Amigo’s first Scheme this would not have been a problem. We do not know yet how any second shcme will be set up.
Sara (Debt Camel) says
Yesterday Amigo published their half-year results. They now have a LOT of money in the bank but progress on a second Scheme seems slow. The FCA hasn’t even been sent the final proposal yet and Amigo warns the new Scheme will take about 4 months to go through the court approval process. See https://debtcamel.co.uk/amigo-second-scheme-slow-progress/ for details.