FCA spares Amigo £72.9m fine to ensure burnt customers get redress
The City watchdog has publicly censured beleaguered lender Amigo for a loan mis-selling scandal but spared it a £72.9m fine, saying it would prevent the firm from paying out compensation to customers.
Amigo was suspended from lending by the Financial Conduct Authority after failing to conduct proper affordability checks and for dishing out high-interest loans to borrowers with shaky credit histories.
The firm secured high court approval for a redress scheme last year and was given the green light from the FCA to restart lending in October.
The watchdog today said it had withheld from imposing a hefty fine on the grounds it would cause the firm “serious financial hardship” and threaten its ability to pay redress to customers as part of a high-court sanctioned scheme.
The FCA’s executive director of enforcement and market oversight Mark Steward, said Amigo “failed to assess properly the affordability of its lending, especially to vulnerable consumers” and withholding the fine would ensure a better outcome for burnt customers.
“The firm proposed a scheme of arrangement as Amigo could not afford the sizable redress bill in full. Following intervention by the FCA, the scheme was ultimately approved by the creditors, including the affected customers, and by the Court,” he said.
“The scheme aims to ensure an amount of redress is paid to affected customers that is better for customers, in these parlous circumstances, than any other likely outcome.”
Amigo provided loans for borrowers with poor credit histories who were unable to access credit from elsewhere.
Between the 1 November 2018 and 31 March 2020, the FCA ruled the firm did not have appropriate processes in place to ensure it adequately assessed borrower and guarantor circumstances before approving a loan. Amigo’s failures led to a high risk of consumer harm, both to borrowers and guarantors, the FCA said.
In a statement today, Amigo chief Danny Malone, said: “I would like to apologise again to any customers impacted for the past failings in lending practises that occurred during the period 2018-2020.
“As a new board and management team, we fully accept the lessons that needed to be learnt for the future and our focus remains on rebuilding a business that delivers better outcomes for customers, backed by stronger lending controls and a better culture. “