Three major items of news this week: Amigo scheme rejected by court case, the FCA bans the loyalty penalty for insurance and a demand for a fairer social tariff for water.
Amigo Scheme NOT approved by the court after the FCA objected…
- In the matter os ALL Scheme Limited Bailii – the judgment
- Scheme of Arrangement: result of second Court hearing Amigo: “Amigo is incredibly disappointed… We are currently reviewing all our options“.
- Court rejects Amigo Scheme of Arrangement my summary of what happened in court and the judgment.
- Amigo Loans on the brink: Subprime lender’s shares crash close to 50% after High Court rules against rescue plan Mail: the scheme failed at the final hurdle, after the High Court said it felt roughly 1million current and past borrowers were not given sufficient information to make a decision on its scheme of arrangement.
- Judge throws out Amigo Loans plan to slash compensation for mis-selling victims Evening Standard: Court rules shareholders should share pain with victims and does not believe only alternative is collapse.
… and implications for the wider bad credit market:
- FCA response to Amigo’s Scheme being rejected by the High Court FCA: “We have significant concerns about Schemes of Arrangement being used by firms to unfairly avoid paying customers redress.”
- Judge leaves Amigo friendless Times (paywall): there’s a risk the FCA and the court overplay their hand, that businesses fail, clients get nothing — and loan sharks move in. Yet they’re right to call the companies’ bluff. No real amigo would propose schemes this customer-unfriendly.
- Loans watchdog Sheldon Mills: My sadness over the demise of Provident Financial’s doorstep lending business Mail: “… some providers of high-cost, short-term credit have based their services on gaining lots of customers and then relending to them multiple times”.
- Lenders call for overhaul of mortgage support for struggling homeowners Credit Connect: [the proposed] changes will have a very limited impact on the government purse but have a huge impact on the households that will benefit.
- Senior MP demands answers for leaseholders BBC: three separate mortgage providers have turned down his prospective buyer because Jie’s building doesn’t have an EWS1 form – even though the RICS guidance says it doesn’t need one.
Tenant eviction ban ends TOMORROW – here’s what you need to know Sun: Campaign group Generation Rent has warned that tenants face “a cliff edge” and may lose their homes because of debts built during lockdown restrictions.
The pernicious potential of ‘buy now pay later’ finance FT (paywall): Credit losses for BNPL are low at the moment, but customers who need to routinely defer payments may also be the first to default when recession hits.
Independent review of water affordability CCW: “In their current form, social tariff schemes, which reduce bills for the lowest income households, can’t help everyone that needs help”.
- Millions cannot afford water bills, says watchdog BBC: Whether you are part of the 1.5 million households classed as currently in water poverty or the 3 million who are on the cusp of it, where you live can make a huge difference to the help you receive.
- Water poverty: ministers urged to end ‘postcode lottery’ in England and Wales Guardian: Officials to consider water industry’s consumer watchdog call for single social water tariff.
Benefits & other news
- UK public ‘think Covid boost to universal credit should be permanent’ Guardian: Research finds widespread support for retaining £20-a-week rise as part of broader increase in benefits.
- Loving husband and dad took his own life after benefits were stopped Liverpool Echo: Lee Tarpey was unable to work after suffering with a heart attack and other conditions.
- Effects of taxes and benefits on UK household income ONS: The rise in inequality… in the last decade is largely down to the diminishing effectiveness of cash benefits to redistribute income from the richest to the poorest, coinciding with the freezing of many cash benefits at their … 2016 values.
FCA confirms measures to protect customers from the loyalty penalty in home and motor insurance markets FCA: In 2018, 6 million loyal policy holders would have saved £1.2 billion had they paid the average price for their actual risk.
- Insurers must not penalise loyal customers, says FCA BBC: People renewing their home or motor insurance will pay no more than they would as a new customer from January.
- Car and home insurers to be banned from charging renewing customers more than newbies in loyalty penalty crackdown MSE.
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