Sub-prime loan provider Amigo has avoided paying a £72.9m fine to the Financial Conduct Authority (FCA) because the watchdog deemed it would cause the company “serious financial hardship”.
Amigo was initially hit with the fine for failing to conduct adequate affordability checks on borrowers and guarantors over the period of 1 November 2018 to 31 March 2020.
The financial watchdog arrived at the figure after finding that Amigo’s breaches were one of the most egregious on its scale.
After the addition of “mitigating and aggravating factors”, the FCA came to a fine equivalent to 20% of the firm’s revenue at the time of the breaches, which stood then at £405m.
Mark Steward, executive director of enforcement and market oversight at the FCA, said that the failure to properly assess loan affordability led to “lending that was unaffordable for some and meant guarantors had to step in”.
According to Steward, Amigo’s policy prioritised the “firm’s commercial interests over the obligation to comply with the rules and safeguard customers from unaffordable loans”.
The loan provider will not, however, have to pay the hefty fine as it was determined that it would negatively affect the firm’s ability to meet its commitments to a High Court order to pay redress to customers.
“The firm proposed a scheme of arrangement as Amigo could not afford the sizable redress bill in full,” Steward added.
“Following intervention by the FCA, the scheme was ultimately approved by the creditors, including the affected customers, and by the Court. The scheme aims to ensure an amount of redress is paid to affected customers that is better for customers.”
Danny Malone, chief executive of Amigo, 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.”
Amigo, which saw booming profits in the latter years of the 2010s, ceased its lending after regulators found it had acted irresponsibly.
The company promised a comeback with an emphasis on responsible lending last year, though it has struggled to raise funds from investors.