You can now vote on Amigo’s Scheme.
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!
The approval process for the Scheme
On 30 March, the First Court Hearing gave the go-ahead for Amigo to organise the creditor voting after the FCA said it does not support the Scheme but it won’t oppose it.
From here the approval process is as follows:
- Late April – creditors’ meeting
A formal creditors’ meeting will be held online where customers and FOS can vote on whether the Scheme should go ahead. But you don’t need to attend this online meeting to vote. Instead you can vote now on a page that Amigo has set up.
- 19 May – Second Court Hearing
The second court hearing will consider whether the Scheme should go ahead and whether it is fair to customers.
- Late-May – provisional start date for the Scheme.
An overview of the Scheme
When 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 still 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. 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.
Amigo customers – voting on the Scheme
For more about the proposed Scheme, read the Practice Statement Letter and Explanatory Statement and look at my other articles on the Scheme.
You cannot submit a Claim to the Scheme until it is approved, see the Timetable above. All you can do now is vote. You can vote here.
First Log into the Scheme Portal by supplying your mobile number and date of birth. They then send a code to your phone to log in.
Then you can vote. It warns you you should only vote if you think you have a valid claim. Amigo isn’t handing out money to everyone who puts their details in – they will be assessing your claim.
If you don’t know if you have a claim, read Refunds for guarantor loan borrowers or Complaints by guarantors. Those pages explain what “affordability complaints” are and will help you understand if you may have a good claim on the Amigo Scheme. Briefly:
- guarantors who did not make any payments and where the loan has been repaid in full do not have a possible claim to any refund.
- borrowers who have repaid their loans have a claim if the loan was “unaffordable”, for example if repaying it meant your other debts increased.
- guarantors who have made payments to a loan that has been repaid can complain if the loan was unaffordable for the borrower or for the guarantor.
- borrowers and guarantors for current loans can complain if the loan was unaffordable for them.
The last voting page is about the value of your vote. This is needed as the vote has to be passed by 50% of the number of people voting and also by 75% of the value.
You don’t need to complete this value if you are making an affordability complaint as Amigo will calculate it for you. But there is an exception – if your loan is pretty old, over 6 years probably, Amigo may not be able to find it – in this case you can enter the amount of interest you paid as the value.
If your vote is about any other issue, you need to put the amount of money you are claiming as the value. Leave a comment below if you aren’t sure.
After you have voted, you can go back and change your vote if you want.
Vote Yes or No?
I am not going to tell you how you should vote. But I think Amigo’s “vote for your money” slogan is way too simplistic.
Here are some points to consider for people in different situations.
Current borrowers and guarantors
For most people, the number one priority is getting their guarantor released and their balanced reduced or cleared. The chance of a small cash refund is pretty unimportant compared with that.
You can get your balance reduced/cleared if your claim is upheld in the Scheme OR if it is upheld by the administrators if Amigo goes under.
You won’t get any more from the Scheme than you would from administration unless you also get a small cash refund – there won’t be any cash refunds in administration.
So what matters is whether your claim is MORE LIKELY to be upheld by Amigo or by administrators.
I am concerned that Amigo may be going to reject some good complaints, see Will Amigo’s Scheme reject too many claims? In that case you may be better off voting No and hope the Scheme is rejected.
If you have had several loans, there is also the problem of the “unpaid interest deduction”. This is an amount Amigo takes off your refund if it upholds a top up loan but not an earlier loan.
That could mean you are left owing Amigo more in the Scheme than in administration. See Amigo should end unpaid interest deductions and remove CCJs for details.
Borrowers and guarantors where the loan is repaid
Guarantors only have a claim here if they made payments, otherwise there is nothing to be refunded.
In administration, there won’t be any cash refunds, only balance set-offs for people with current loans
So in administration if you don’t have a current loan you will not get anything.
You can vote for the scheme if you are happy to only get paid a tiny amount, perhaps 10% of what you should have received.
Do you think getting only 10% is fair?
The FCA doesn’t like what Amigo is doing but says it is up to the customers to decide if it is fair. So you can say No if you want.
Customers are the huge losers with this Scheme. Amigo’s bondholders are being paid in full. The list of the Amigo directors’ shareholdings is given in section 16 of the Explanatory Statement. They stand to make millions if the share price goes up a lot.
If you vote No, you will still be able to make a claim in the Scheme if it does go ahead.