Amigo Loans plots new scheme to pay off customers

Amigo Loans has launched a last-ditch attempt to stay afloat following a wave of customer complaints.

The controversial guarantor lender, whose loans carry interest rates of up to 49.9 per cent, has launched a ‘scheme of arrangement’ to deal with the problem, which will limit the amount of compensation it pays to customers.

Scores have been complaining to Amigo, founded by James Benamor, over the last year after they were given loans they said they could never have afforded to repay.

Scores have been complaining to Amigo, founded by James Benamor (pictured), over the last year after they were given loans they said they could never have afforded to repay

The company loans to customers with a poor credit score if they have a friend or family member willing to make repayments if they can’t. 

It has also had complaints from these guarantors who found themselves on the hook for thousands of pounds.

Amigo admitted weaknesses in its affordability checks, and such was the level of complaints that the firm was at risk of going bust.

But the Financial Conduct Authority could not give its unqualified support ‘based on the current terms of the scheme and without having completed its assessment’, said Amigo.

Customers with valid complaints will have compensation deducted from the outstanding loan balance.