On 29 November 2021, Amigo published its results for the six months ended 30 September 2021.
Amigo’s first Scheme of Arrangement was rejected by the Court in May. Since then, Amigo has been trying to come up with a new Scheme that is fairer to the customers given unaffordable loans.
Amigo says:
“the proposed contribution to the new Scheme will be significantly increased from that of the original Scheme.”
But there are no details in this announcement about how much money will be in the new Scheme for refunds.
This article looks at what I think the important points for customers are.
Contents
Piles of cash in the bank
In court in May, Amigo said it would go into administration shortly if its scheme was not approved. At that time the FCA said Amigo was not likely to go insolvent quickly as it had a strong cash position. The FCA has obviously been proved right.
That strong cash position has now increased even further: Amigo has £260 million of unrestricted cash.
Its net borrowing position is now positive, so it has more than enough cash to repay all its bondholders. It is considering repaying some bondholders early in January.
This cash mountain has resulted from customers being pressured to carry on paying loans while Amigo is not paying out on any complaints.
… but slow progress on second Scheme
Gary Jennison, Amigo’s CEO, admits that progress towards a new Scheme
“has taken much longer than we had hoped”.
Amigo has set up a customer committee to enable it to get a better feel for what customers might prefer in a second Scheme.
The first meeting was at the start of August. On 28 September Amigo submitted a draft second Scheme to the customer committee and to the FCA. The FCA has started a review of this, even though it doesn’t yet have the final version. On 12 November Amigo submitted a revised draft to the customer committee. The FCA has not yet been sent this.
It seems that the committee has said it wants customers to be paid an increased level of redress as soon as possible. It is not interested in either of the proposed alternatives:
- customers being offered a percentage of future profits. In a previous post, I called this element of the first Scheme “perhaps some jam tomorrow”.
- customers being given an equity stake in Amigo.
This can hardly have come as a surprise, so perhaps the delay in reaching a final decision is about the size of the cash offer.
For every month this drags on, Amigo gets more money in its bank. So more can be made available to the new Scheme for redress.
Possible future timings
From here on the steps will be:
- Amigo will send the FCA a final proposal when the customer committee has approved it;
- assuming the FCA doesn’t reject it, Amigo will publish a Practice Statement Letter (PSL) which is a brief document describing the Scheme. This will be sent to all customers and the court process starts;
- a Court hearing, known as the Convening Hearing, will approve the voting arrangements;
- customers will be able to vote online and a creditor meeting will be called;
- a second Court hearing, known as the Sanctioning Hearing, will be held to consider if the proposed Scheme is fair and should proceed.
Amigo says it expects the Court process to take at least four months.
During this time, Amigo is expecting to have to raise money from the city and/or from existing shareholders. This equity raise will be going on at the same time as the court process. And Amigo has also said it will be hard to complete an equity raise under the two current FCA investigations into Amigo’s conduct have been completed.
That means the second Scheme cannot start until April 2022 at the earliest. Since the FCA does not yet have the final proposal, that is being optimistic. It could take several months more. This pushes any payouts from the Scheme well into 2023.
An alternative “wind-down” option… or administration
Today’s announcement says that Customers will be asked to vote on two options in the second Scheme.
The first is a “New Business Scheme” which will see Amigo restart lending:
- this will only happen if there is a successful equity raise and if the FCA agrees that Amigo can restart lending.
The second is a “Managed Wind-down” of the Amigo Loans Ltd business under a Scheme framework:
- here any future lending would have to be undertaken by a different legal entity, which would require FCA authorisation. I don’t know why the FCA would agree to this – it sounds a lot like what the FCA refers to as phoenixing, a process it has always objected to.
So far Amigo has said that if it went into administration, customers with current loans would be able to have those reduced or cleared by their refunds for unaffordable lending, but there would be no cash to pay any refunds.
But at some point, Amigo’s cash pile will be so large that there will be some cash to be returned to customers owed redress and other unsecured creditors if Amigo fails and goes into administration. Amigo may already be at this stage – if not, it may well reach it in the next few months.
This increasing cash pile may be what is delaying the customer committee decision. Both the New Business and Wind-Down options in the Scheme proposal have to be clearly better for customers than what they would get in administration.
16 months with no complaint handling
If people with current loans had been allowed to stop making payments earlier until their complaints were determined, many of them would have been much better off.
I think the FCA has effectively abandoned tens of thousands of vulnerable customers by allowing Amigo to stop all complaint handling. This has been made worse by allowing Amigo to continue to send threatening-sounding communications about possible court action to borrowers and guarantors.
The FCA should be ashamed.
UPDATE
In May 2022 the new Amigo Scheme was approved by the court and went live.
See Amigo’s Scheme for the latest news on this.
Comments on this page are now closed.
Simon says
Amigo loans are an utter disgrace, as are the FCA. This whole “we’re looking at alternative scheme rules” charade is frankly taking the p*ss. They could theoretically string this out for decades with absolutely no repercussions from the FCA or any other government back organisation.
Meanwhile, current customers are forced to repay back their unaffordable loans or face the threat of damaged credit reports, enforcement action or worse still, bankruptcy.
Gemma Wallis says
I’m confused, do we still have the second payment now in December? And also by reading this, are we due anymore redress then?
Sara (Debt Camel) says
I think you are thinking about the Money Shop scheme? This new article is on the proposed Amigo scheme.
Gemma wallis says
Yes sorry that is what I meant x
Sonia says
I’m to scared to stop paying because then they start hassling my guarantor which would cause friction between us! I have tried so many times to complain against Amigo and never won. I stupidly took out the loan when I was in a bad way and regret it now I wasn’t thinking clearly it’s the worst situation to be in.
Sara (Debt Camel) says
Many people here have said it was the worse financial decision of their life :(
Stevie says
Ask for an equitable set off, i got mines the other day, just call and ask for it itll stop them attempting payments and stop with the calls and txts to your guarantor and yourself. Until your complaint has been dealt with.
Rebecca says
How are they able to not respond to complaints for 16 months whilst holding on to 260 million pound for bondholders??? We are the ones affected!!! Absolute disgrace! Can we stop paying without repercussion whilst awaiting a response?
Sara (Debt Camel) says
You have already complained?
Your current loan, how much did you borrow? (If this was atop up, what was the top up loan size, it would have been more than the amount of cash you got.) and how much have you paid to this loan so far?
Rebecca says
It was a top up.
It was for 7k and I have paid 8k back and over 17k in total. I have asked for equity set off now. I am also complaining to the FCA
Sara (Debt Camel) says
if they refuse you equitable set off (it seems a bit random if you have had more then one loan) then you need to talk to your guarantor about stopping paying any way – see https://debtcamel.co.uk/stop-paying-amigo-pros-and-cons/
Rebecca says
I am eligible and have accepted the set off. I am complaining to the FCA because I don’t think they should be able to report our files in default whilst they are not working complaints! If we keep paying we won’t get it all back and if we don’t pur files take the impact until the complaint redress which could take another 8 months.
S. P says
I am the guarantor, the loan taker only paid 6 payments before being declared bankrupt, I have been paying for 4 years. I have now paid the original loan off, but not at the full amount each month. We have paid back almost £10th, still have about £6 to go, the original loan was about £8. I finally got an email saying, “we have seen your complaint, it’s been to long so you could take it to the fSA but we are all ignoring you.” I have never had any problems with them about paying less as they are the ones that said the agreed amount was too much, but I am worried about stopping, as the guarantor I don’t see any information to help me understand my position in this matter.
Please advice guarantors their options
Sara (Debt Camel) says
A guarantor’s position is often easier with Amigo as if they can’t pay, Amigo has no-one else to pressure to pay. The big problem for the guarantor is most of them are desperate to not have Amigo go after their dad or sister or friend…
You have two possible reasons to complain – that Amigo failed to check the loan was affordable for the borrower – if they went bankrupt very soon after it suggests it wasn’t! And that the loan was unaffordable for you. You should complain about both of these things – it gives you two chances to have your case upheld and be released as guarantor.
Has Amigo taken you to court? Can you say some more about your current financial position – do you have a house? Other problem debts?
Sam says
Complained to the FCA as recomended many months ago. Still no final response from the complaints commisioner. Keeps getting rolled 4 weeks. Doubt ill get an answer.
I am writing to give you an update on the progress of your complaint. The Commissioner hopes to be able to provide you with a decision on your complaint within the next four weeks. If this is not possible, we will update you again in four weeks’ time.
Honestly shocking that the FCA is even allowing this to happen. Online petition anyone??
A.C. says
Start it mate!
Valerie Anne Sarson says
Hi I am very suspicious of amigo regarding delay of new scheme being proposed. I suspect a large number of people are no longer paying full amount, some on reduced payments. It is unlikely then they will be able to raise a massive amount of refinancing without some financial assistance or able to start lending again in order to keep going until April 2022 which is looking like earliest new scheme will be proposed. I just don’t trust them and feel they have hidden agenda. I hope they don’t go down same dirty tricks route as Northern Rock before they went under. Even if and when new scheme approved it will take at least 2 years to complete process. How are they going to pay staff over that period and may have to take additional staff for admin involved. Amigo should be barred from trading again and new lending until this scheme has been completed. I realise some are wanting compensation but the reality is if you don’t already have agreed claim with them and are relying on new scheme even with enhanced payout you would be lucky to get back more than 400 pounds on a compensation amount of around 6k.
Sara (Debt Camel) says
Yes, Amigo reported yesterday that the number of accounts in arrears is going up.
We really have no idea what the % payout is likely to be. Nor if Amigo are still planning to apply the unfair “deduction for unpaid interest”.
Nazia bibi says
Hi sara i stopped paying amigos back in march did get threatening emails and texts and a letter before action but then they went quiet till last werk sending out a letter of arrears should i ask for the equitable set off or just leave it what do you think?
Sara (Debt Camel) says
If the letter you got was a Notice of Sums In Arrears, then they are legally obliged to send them out and this would happen even if they agree to this Equitable Set Off pause.
Nazia bibi says
Hi sara so i think i will leave it as i do know that i have paid more than the capital borrowed but they can also turn around and say that i dont qualify see what happens
Chris Bone says
The sheer prospect of Amigo ever being allowed to lend money again using the guarantor model just beggars belief to be frank.
Sara (Debt Camel) says
I agree.
Actually I think all guarantor loans should be banned unless both the borrower and the lender take separate professional advice first and the guarantor is provided with a copy of the borrower’s credit record so they are fully informed. These loans are dangerous.
Marie says
How is it fair our credit rating gets abolished when we apply for equitable set off. My complaint was put in on August 2020 they promised me a final response almost every week and never had it then in December they announced the scheme . So in January I borrowed 2000 to put my self in credit with amigo so they would stop hassling my mum for payments as she my guarantor but obviously cause this has taken so long now my 2000 credit is running out and I have applied for equitable set off. Feel broken right now and there is nothing I can do .
Sara (Debt Camel) says
I do understand why this feels unfair, for your credit rating to be harmed because Amigo are refusing to make a decision on your complaint. But there is nothing you can do. This is better than borrowing more, paying interest on that just to pay Amigo, when you will only get back a small percentage of any refund in the end. The default is removed if you win your complaint.
Rebecca says
I have complained to the FCA for allowing this to happen, its detrimental to customers
Anne-Marie Kennedy says
Jeezo. The only people benefitting from this are Amigo. Like many others my affordability complaint is with the FCA in limbo as Amigo feign bankruptcy and faff about.
The good news is, I’ve paid my loan and will never be so stupid again !. Good luck to everyone who still has to deal with these vultures.
M says
**PLEASE READ**
Whilst some of what is written above is correct, much of it is incorrect or misleading, please do your own research and contact Amigo to FULLY understand your options if you or your guarantor is strugglng. After following Saras journey on this for sometime she is right in the sense that Amigo and FCA have caused a ridiculous situation, but her personal feelings towards Amigo impact on her professionalism and she is clearly unable to communicate unbiased guidance that actually looks out for you, the customer.
I’ve seen people follow Sara’s advice who now have defaults on their records, see her FB group. The contract is a legal document and until a solution is found and all valid claims identified you should reach out to Amigo or seek independent advice before thinking of cancelling repayments, everyones circumstances are different. Remember, once a default is on your record its very difficult, near impossible to get removed, take time to consider is it worth it? If you are struggling or your circumstances have changed then maybe reach out to Citizens Advice, just google “Potentially Vulnerable Customer Citizens Advice”, this will help you.
The scheme has taken much longer than expected due to the customer commitee, this a group of current and existing customers alongside an independent legal firm. They are fighting for you and represent your best interests.
Sara (Debt Camel) says
Not sure which bits in the above article you think are incorrect or misleading?
My article on stopping paying Amigo clearly highlights a default as one of the downsides of stopping paying: https://debtcamel.co.uk/amigo-second-scheme-slow-progress/
If someone wins a complaint in the Scheme or in administration, all negative marks on their credit records are removed.
A customer with a current loan has to decide what is in their best interest now, given that Amigo says it will be at least 4 months until any new Scheme starts. People who are struggling to afford the repayments may have much bigger problems than worries about their credit record.
S says
** PLEASE READ**
What M has written is very misleading with a quick bit of research you’ll find that what Sara has written is nearly always correct and that what M has written is stretching the truth beyond what people realistically can be expected to believe. The problem is and always will be Amigo and not the fca they couldn’t care less about customers it’s all about profits. They’ve lied to me repeatedly and when challenged on it just send emails saying it doesn’t matter.
Only Amigo can be blamed for dragging this out for so long the customer committee has only recently been set up so can’t be blamed for over a year of dragging this out.
FO says
**PLEASE READ**
Whether Sara puts less responsibility on the shoulders of borrowers than she should, the facts of the matter are uncontested.
Your claim that it is “nigh on impossible to get a default removed from your credit file” is just false. If your claim is successful then it couldn’t be more simple. Citizens Advice advise the exact same thing. The only reason to write this is to either ferment fear or to protect the interests of your employer, Amigo. Either way, it is pathetic.
Mike says
I did the same thing and felt better for doing it, staff were telling me that they are unsure if they will have jobs soon. I did feel bad for them, but good for myself at the same time.
What a mess
Lee West says
My complaint has been nearly a year now I’ve payed £2000 over the original £5000 I borrowed I get know contact from them don’t know if I can get my payments stopped can anyone help as amigo are doing nothing
Sara (Debt Camel) says
Have you phoned them up and asked for Equitable set off?
M Moxon says
I have try calling theses people but they are not taking any calls I wish I never took the loan out now I can see it was one big mistake they have just made people more in a mess I hope they do go bust and the court can stop them giving anymore loans out cause am suffering trying to pay this back can I stop payments are can anyone help me M Moxon
Sara (Debt Camel) says
How large was this loan? how much have you paid towards it so far?
Rebecca says
They are taking calls I spoke to someone within 5 mins 2 days ago. Maybe go through all the options ans wait for the last and it says if you still need to talk please hold the line.
Lou says
I stopped paying Amigo back in Feb when they agreed to uphold my first 2 loans and stopped adding any interest. They stated my balance would be reduced to £2600 if I accepted the offer but I didnt as shortly after the FOS recommended all 3 loans should be upheld and I agreed with this decision but amigo never responded.
When I asked for equitable set off in September they stated that I did not qualify as I had only repaid £6500 of the principal on the 3rd loan and needed to pay the rest off (about £1200) before I could qualify. I reminded them that they had previously admitted to unaffordable lending on the first 2 loans, and the figures they were now quoting me do not correlate with the figures they quoted back in Feb. I stated I would not be making payments whilst my complaint was unresolved and invited them to take me and my guarantor to court should they wish. Weve not heard a peep from them since.
Currently my online account states my balance is £6100 and I am £1200 in arrears. They don’t know their backsides from their elbows clearly.
J says
I haven’t made a complaint yet as I thought complaints were not being accepted by Amigo. Is this correct?
Sara (Debt Camel) says
You can complain now but Amigo will not look at it until there is a second Scheme.
This current loan, is it your first from Amigo? How much did you borrow and how much have you repaid so far?
Do you feel the loan was unaffordable? A loan is only afforcable if at the time you too it out it was likely you would be able to repay it and still be able to pay your other debts, bills and living expenses, without getting any deeper into debt.
Daryl says
I took out an amigo loan in 2008, and quickly thereafter took out 4 top up loans, all at the click of a button and all within minutes funds transferred to my account. No affordability or guarantor checks carried out. I quickly got into financial difficulty and could not keep up with repayments. Amigo took me to court and I have been landed with a CCJ (Decree in Scotland) and having to repay their solicitors (Shoosmith LLP) £100 per month. I managed to get my balance down to £6000 but they have this year added more interest and charges and now balance at £9500 again. I have a complaint but obviously no resolution due to the arrangement scheme. If I stop paying what will happen? I feel this will never end and will never be paid off.
Sara (Debt Camel) says
what has happened to your guarantor?
Daryl says
My guarantor was also give a CCJ (Decree) but unsure if this is even visible on the credit file, can’t see it.
Sara (Debt Camel) says
ok, as you are both in Scotland, I suggest you talk to a Scottish adviser about all your options. Leave a comment on this page https://www.advicescotland.com/debt-solutions/ or use the web chat. Alan is familar with affordabilty complaints – say I sent you over because of the Decrees.
Daryl says
Thankyou for looking at it so quickly.
Alan says
Hi Daryl
Happy to try help if you wish to visit http://www.advicescotland.com and can chat via Messengers
Daryl says
Hi Alan,
Yes that would be great if you can help please and give me some advice on this. I don’t have messenger or Facebook, is there any other way to contact you ?
Thanks,
Paula says
I just received a letter tellin me I missed a payment and they are giving me chance to pay before they collect of my guarantor!! That is till the 12th … It only arrived today !
I am in equitable set off and they told me the only thing they would send is NOSIA
This is a letter to say pay or we will get it from the guarantor and report to the credit agencies.
Are they allowed to do this?
Sara (Debt Camel) says
This shouldn’t be happening. I suggest you need to phone them up.
Has your guarantor cancelled their direct debit and phoned their bank to cancel the continuous payment authority Amigo has over their debit card? better safe than sorry…