FCA response to Amigo’s Scheme being rejected by the High Court

The Court has refused to sanction the Scheme of Arrangement proposed by Amigo (the Scheme). The FCA had objected to the proposed Scheme and is now carefully considering the Court’s judgment and Amigo’s response.

The FCA has, through its continued engagement with Amigo and participation in the Court hearing, sought to get a better, fairer deal for Amigo’s customers due redress. We believe that a fairer compromise could have been offered to customers, but was not.

The FCA considered it necessary in this case to share with the Court its view that the Scheme as proposed was inherently unfair, as it placed a disproportionate burden on customers, as opposed to shareholders and bondholders, to keep the company afloat.

The FCA believes that Amigo can propose a fairer Scheme to customers. It should also ensure that its customers are fairly represented and advised on alternative proposals for a scheme.

FCA regulated firms must maintain adequate financial resources which includes taking account of the need to pay redress liabilities. We have significant concerns about Schemes of Arrangement being used by firms to unfairly avoid paying customers redress.

Firms should be regularly assessing the adequacy of their financial resources and report to us immediately if they assess they are or will be in financial difficulty. To understand our expectations for their assessments, firms should refer to the FCA Finalised Guidance on assessing adequate financial resources.

This is an important judgment and any firm considering a scheme of arrangement should take it into consideration.

We provide answers to questions consumers may have:

I have complained to Amigo, what do I have to do now?

Amigo is assessing its next steps, for further information please contact Amigo. 

As the court has not sanctioned the Scheme will I still be able to claim compensation?

If you believe that you are entitled to compensation, you should submit a complaint to Amigo.  

Can I still make a complaint to the Financial Ombudsman Service (FOS) about the firm?

The FCA has agreed since December 2020 (when the intention to promote a scheme was announced) to an informal moratorium on the payment of redress claims by Amigo. Following the judgment on Amigo’s proposed Scheme of Arrangement, we believe it is appropriate and necessary to maintain the moratorium to provide the firm with some time to assess their next steps. 

FOS paused progressing complaints against Amigo on 25 March 2021 and are not currently taking on new cases. As we continue to engage with Amigo on potential next steps, FOS will be maintaining their pause on complaint handling. Please check the FOS website for up to date information.

I already have a claim with the FOS, what do I do now? Will I still receive compensation?

If you are due compensation following a complaint to the FOS, then for further information please contact Amigo.

The firm has said they may go into insolvency following the outcome of the hearing. Will I still receive the compensation they owe me?

Should the firm enter an insolvency process, your claim will be assessed in line with insolvency law.

Why did the FCA oppose this Scheme?

The FCA has significant concerns about schemes of arrangement being used by firms to avoid paying customers their full redress.

Our goal throughout our discussions with Amigo has been to try to improve the fairness of the proposed Scheme for consumers. 

We believe that a fair compromise can still be proposed to customers. Under the proposed Scheme, redress creditors would have had their claims significantly reduced and rights restricted, whilst shareholders and bondholders were not contributing what the FCA considers to be their fair share to enable the firm to remain solvent.

What to do if you’re in financial difficulty

Anyone who is struggling financially can get free and impartial advice from the Money Advice Service.