Payday lender Amigo Loans has said it has “learnt the lesson from the past” ahead of the launch of a new guarantor loan product for “underserved” customers.
The Bournemouth firm is set to offer customers two new loan products after it was blocked from trading by the UK’s financial watchdog in March 2020.
The new loans will see Amigo offer sums of up to £5,000 – at rates of up to 39.9 per cent APR – to those unable to get financing from mainstream lenders, after a High Court approved its latest plans last month.
The launch of the new loan product comes after the UK’s financial watchdog said Amigo’s earlier loan product plans would unfairly benefit shareholders over customers, after Amigo customers complained about the loans affordability .
The new products allow customers to pause debt repayments once a year, with no financial penalties, whilst also offering lower interest rates to those who make their repayments on time.
The previous product would have seen Amigo offer loans of up to £10,000, to those earning at least £800 a month, at interest rates of 49.9 per cent APR.
The launch comes after the UK’s Financial Conduct Authority (FCA) held back intervening in Amigo’s most recent plans, as the watchdog said in March the firm should be able to launch its product if the High Court approves it.
The UK’s High Court later gave Amigo the go-ahead in May, as the firm said it had “learnt from the mistakes of the past” in designing the new loan products.
Amigo chief executive Gary Jennison said the new loan product “has been created by a new team, in collaboration with external partners, with the objective of incentivising and rewarding on time payment and thus moving people towards a better credit rating and onto mainstream banking.”