Mis-sold an Amigo loan? Redress could soon be on its way after High Court approves complaints scheme
If you were mis-sold a loan by embattled financial firm Amigo Loans then redress could soon be on its way after the High Court today (23 May) approved a complaints scheme to divide at least £112 million between affected borrowers.
Update: 17 October 2022: The Financial Conduct Authority wrote to Amigo on 13 October saying that it has now met its conditions, and can return to lending on a pilot basis. The guarantor loan company has now begun offering loans under the new name 'Rewardrate'. The position is still the same as outlined below for borrowers owed redress.
The High Court ruling comes just 11 days after more than 145,000 Amigo customers voted in favour of the proposal put forward by the loans company, that will see those with complaints against the lender get back an estimated 41p of every £1 they're owed - and allow Amigo to continue operating.
Below we round-up what the decision means, how to check if you might have been mis-sold a loan, and how to make a claim.
How to check if you were mis-sold a loan by Amigo
Guarantor loans, and other high-interest loans, have been widely mis-sold. Amigo, as one of the largest providers of these types of loans, has been the subject of complaints from customers who felt that the lender didn't do enough checks to make sure they could actually afford the repayments before they were sold the loan.
Legally, lenders have to check that you can afford a loan before lending you the money. So if you've struggled to pay back a high-interest loan, or couldn't comfortably afford it, you might have been mis-sold.
As a general rule, a loan (and any top-up loan) is classed as "unaffordable" if it leaves you so short that you fall behind with bills, or if you need to borrow more to keep up with repayments.
If you think you might have a complaint, double check the mis-sold loan checklist in our Guarantor Loans guide.
Here's how much redress you can expect if you are affected
If your loan was mis-sold, you may be due a refund of any interest and fees paid (plus statutory compensation on top).
It's predicted that customers who are owed money, and no longer have a loan with Amigo, will get back 41p of every £1 they're owed. So, if you're owed £100, you'll actually get back £41.
If you still have a loan with Amigo, your compensation will be worked out slightly differently. Here, any amount you're due will be taken off the amount you still owe in full. So if you're owed £100 from Amigo, this figure in full will be subtracted from the amount you still have left to pay on your loan.
Payouts are only predictions at this stage, based on an estimate of the number of people with valid complaints, and the average amount they might be due in compensation.The amount that's actually paid out will depend on how many people end up complaining, and what percentage of these complaints is upheld.
There are also two additional conditions to Amigo's proposal: Amigo will need to be able to restart its lending business within nine months of scheme approval, AND it will need to raise enough money (amount to be confirmed) in the first 12 months of operating. If these two conditions aren't met, Amigo has said that customers with valid complaints will get back less.
What to do if you've already made a complaint to Amigo
If you have put in a complaint to Amigo but have NOT been offered a payout yet, your complaint will be transferred over automatically as part of the new scheme - you don't need to submit another one.
If you're unhappy with the outcome of your complaint, you'll be able to submit an appeal to an independent scheme adjudicator.
Not yet made a complaint? There's still time to do so
If you believe you have been mis-sold an Amigo loan – whether you're a past or present customer – you CAN still make a new complaint.
Amigo has launched an online 'scheme portal' (a dedicated website) where you can submit your complaint. The deadline for submitting your complaint is 26 November 2022.
Important: It doesn't matter whether you have an ongoing loan or you've already paid it off, you can make a reclaim. Amigo has said that complaints about any loan going back to 2005 (when the business started) can be submitted to the scheme.
For more details on how to make a complaint, read our full Reclaim mis-sold guarantor loans guide.