Source - LSE Regulatory
RNS Number : 6832M
Amigo Holdings PLC
25 January 2021






25 January 2021


Amigo Holdings PLC
(the "Company" or "Amigo")


Practice Statement Letter for a Scheme of Arrangement of ALL Scheme Ltd
and Regulatory, Complaints and Covid-19 payment holiday Update

Amigo Holdings PLC (LSE: AMGO), a leading provider of guarantor loans in the UK, provides an update on its announcement dated 21 December 2020, titled "Potential Scheme of Arrangement", and on the other matters set out below. 


Amigo Holdings PLC has recently incorporated a new wholly owned subsidiary, ALL Scheme Ltd ("SchemeCo"), for the purpose of SchemeCo applying for a Scheme of Arrangement under Part 26 of the Companies Act 2006 ("Scheme"), as envisaged in the RNS dated 21 December 2020. 


As the first formal step for a Scheme, SchemeCo is today issuing a letter to customers (borrowers and guarantors) and the Financial Ombudsman Service ("FOS") pursuant to Practice Statement (Companies: Schemes of Arrangement under Part 26 and Part 26A of the Companies Act 2006 dated 26 June 2020) ("the Letter"). A copy of the Letter can be found at The Court convening hearing for the Scheme is listed for 30 March 2021 and further information is provided in the Letter. SchemeCo will seek to contact all known Scheme Creditors (as defined below) and there will be advertisements in certain national newspapers because some contact details may be out of date or no longer available due to the Data Protection Act requirement to delete older data. Amigo wants to ensure that all relevant customers are able to participate in the Scheme. 


As detailed in the Letter, SchemeCo is the only applicant for the Scheme. Broadly (and see the Letter for more details), the creditors under the Scheme are, subject to limited exclusions:

1.    All current and former customers (both borrowers and guarantors) with any potential redress claims in relation to historic loans made by Amigo Loans Ltd before 21 December 2020 ("Redress Creditors").  These redress claims are primarily related to affordability but also include all claims arising out of or in relation to those historic loans, so that the Scheme will provide certainty to the total liability arising from these customer complaints; and

2.    Certain related liabilities owed to the FOS (together "Scheme Creditors"). 


No other company at Amigo is party to the Scheme. Likewise, Amigo Holdings PLC's shareholders and all the other creditors of Amigo are not party to the Scheme and their rights are unaffected by it, so there is no action for any such persons to take. The effect of this is that the Company will not be seeking prior authority from shareholders and bondholders to proceed with the Scheme. The directors are of the opinion that it is in the best interests of the Company, its subsidiaries and all stakeholders to proceed with the commencement of the Scheme as quickly as possible.


Faced by the on-going serious problems arising from the current complaints situation, Amigo considers that the Scheme is the best way to treat the Redress Creditors, the FOS and all its stakeholders fairly. In deciding to commence a Scheme process, Amigo has considered the alternatives to a Scheme. If the Scheme fails, Amigo will likely go into insolvency and based on its calculations no compensation would be paid to customers. 


Amigo, supported by its independent financial and legal advisers, believes that failure of the Scheme will result in the Scheme Creditors receiving zero cash payments, given the secured creditors who rank ahead of the unsecured Scheme Creditors. This zero cash payment is in comparison to their sharing in £15 million to £35 million, plus a cash contribution to the Scheme based on 15% of pre-tax profit for the next four financial years ending 31 March 2025 (see paragraph 18 of the Letter), an increase on the amount in the announcement dated 21 December 2020. Amigo strongly believes that the Scheme is in the best interests of the Redress Creditors, its customers, the FOS and all its stakeholders.


Section 166 appointment


Amigo has continued discussions with the Financial Conduct Authority ("FCA") and the FOS, to keep them informed of the Scheme as it has progressed. In connection with the Scheme, the FCA required the appointment of a skilled person under section 166 of the Financial Services and Markets Act 2000, which is at an early stage. The skilled person has been appointed to review the redress methodology, to subsequently review its implementation, and to comment on the fairness of the Scheme. The skilled person will also assess the extent to which Amigo is meeting threshold conditions.


SchemeCo has issued the Letter without the support of the FCA, which has not completed its assessment of the Scheme and its underlying methodology for assessing claims while Amigo and SchemeCo continues to develop its terms and underlying methodology. The underlying methodology for determining claims is a critical component of the Scheme as it is this that will be used to determine whether a claim is valid for the purposes of the Scheme and its amount. Amigo, as an authorised firm, had initially sought from the FCA a "letter of non-objection" to the terms of the Scheme, as has conventionally been the case, in order to demonstrate to a court that the proposed Scheme has not raised regulatory concerns that might undermine Amigo's and, in turn, SchemeCo's ability to implement the Scheme. The FCA has informed Amigo that it cannot provide a "letter of non-objection" based on the current terms of the Scheme and without having completed its assessment and that the FCA reserves the right to take such action as it may consider appropriate once the terms of the Scheme and its methodology have been finalised, or otherwise. Amigo has now withdrawn its request for a "letter of non-objection" but believes it will be able to implement the Scheme because it proposes to use the time prior to the Court convening hearing listed for 30 March 2021 to work constructively with the FCA to resolve any concerns which the FCA has. If ultimately the FCA decides to object to the Scheme or take any other action, SchemeCo will have to consider the viability of the Scheme and Amigo will have to consider what the options are at that stage. Further, the FCA continues to assess whether Amigo is failing (or is likely to fail) to satisfy the FCA's threshold conditions (minimum standards all authorised firms are expected to meet) and its proposed approach to future lending. In light of the further analysis that the FCA can be expected to complete, the FCA has informed Amigo that there is a risk that the FCA may impose a requirement on Amigo's regulatory permissions which restricts it from continuing its business and which affects SchemeCo's ability to implement the Scheme.


Claims handling/payment and DISP waiver


Regarding the handling and payment of claims relating to current and outstanding customer redress issues, as announced in the RNS dated 21 December 2020, Amigo stopped the payment of all such claims, except for certain limited cases described in that RNS. Following discussions with the FCA, Amigo withdrew its DISP waiver application to suspend complaint handling and Amigo (as set out in the RNS dated 21 December 2020) has been continuing to review and process but not to pay complaints, again except for those certain limited cases described in that RNS. 


Update on complaints VReq and complaints provision


Amigo also provides an update on the Voluntary Requirement ("VReq") related to complaints announced on 3 July 2020 and its related RNS dated 3 November 2020. Since that RNS, a further number of historic complaints were identified which were not included in the numbers provided in the RNS dated 3 November 2020. Those 1,192 complaints were included in the provision for complaints detailed in the RNS dated 26 November 2020 and they are in the process of being resolved.


In light of the cash contribution to the Scheme and the mechanics of the Scheme, the Company believes all of the complaints provision reported within the Half Year Report would be utilised to cover the costs of settling pre-Scheme complaints including approximately £30 million processed in the quarter ended 31 December 2020, modelled customer balance reductions through set-off, SchemeCo costs and the cash contribution to the Scheme. 


Update on Covid-19 payment holidays


Amigo also provides an update on the Covid-19 payment holidays situation last reported in the Half Year Report on 26 November 2020. As at 31 December 2020, the number of active plans had reduced to approximately 13,000 with approximately 42,000 plans ending and returning to standard payments with just under 7,000 settled. 


Gary Jennison, CEO of Amigo, said:

"Amigo faces very serious challenges from historic lending to customers. The new management team has a strong commitment to do what is best for our customers and our other stakeholders. We will continue to work cooperatively, constructively and transparently with our regulator, the FCA, as we discuss the Scheme and its detailed terms. Any recommendations that arise during the FCA's review, including from the section 166 process will receive the full attention of management as we want to address any concerns our regulator might have. Treating customers fairly is at the core of the new Amigo management team and we are committed to following the right approach to deliver the right customer outcomes.


"We are focused on sorting out the problems of the past, and will not rush our future - be that ensuring that customers are given time to review and assess the Scheme or establishing the right processes and procedures to resume lending to the very large community excluded from mainstream bank finance. This large group of 10-12 million UK adults who face financial exclusion need firms like Amigo to provide fair and affordable credit. It is a demographic that is set to increase as the economic impact of the global pandemic hits later in 2021.


"Our new customer proposition, Amigo 2.0, is something that I am personally very excited about as it represents Amigo's future. It emphasises the importance of helping customers repair their credit ratings and to get their financial lives back on track. If we get this right and fully satisfy our regulator, the Scheme will be the best way for Amigo to survive and serve the financially excluded. The Scheme will also enable us to pay redress to existing customers who have a valid claim, including making further payments out of future profits. A return to lending will help to rebuild Amigo and, a return to profitability, will further increase the redress payments to customers with valid claims using the Scheme."


This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it applies in the United Kingdom by virtue of Section 3 of the European Union (Withdrawal) Act 2018.  The person responsible for this announcement is Roger Bennett, Company Secretary.


Amigo Holdings PLC                    

Kate Patrick                      Head of Investor Relations         

Roger Bennett                 Company Secretary



Hawthorn Advisors

Lorna Cobbett                  Tel: +44 (0)7771 344 781


Senior Secured Notes

This announcement constitutes notice by Amigo Luxembourg S.A. (the "Issuer") to the holders of the Issuer's 7.625% Senior Secured Notes due 2024 (for the notes issued pursuant to Rule 144A of the United States Securities Act of 1933, ISIN: XS1533928468 and Common Code: 153392846; for the notes issued pursuant to Regulation S of the United States Securities Act of 1933, ISIN: XS1533928625 and Common Code: 153392862) (the "Notes") issued pursuant to pursuant to Section 4.03(a)(3) of an indenture dated January 20, 2017 among, inter alia, the Issuer, the guarantors named therein and U.S. Bank Trustees Limited, as trustee and security agent.  Amigo Holdings PLC is the indirect parent company of the Issuer.  This announcement shall constitute a "Report" to holders of the Notes.



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