The sub-prime lender Amigo has dodged a £73m fine despite having put consumers at a “high risk” of harm, amid fears that the financial penalty could have led to its collapse.
The Financial Conduct Authority (FCA) investigation found Amigo put business interests ahead of its customers, by failing to properly assess whether customers, or their guarantors, could afford to repay loans they applied for – noting faults in both its automated tech and human oversight between November 2018 and March 2020.
It meant there was an increased risk that guarantors, who were often friends and family members, would have to step in to cover the loan when borrowers failed to repay.
“It also had the effect of prioritising the firm’s commercial interests over the obligation to comply with the rules and safeguard customers from unaffordable loans,” Mark Steward, the FCA’s director of enforcement said.
The watchdog planned to fine Amigo £72.9m but waived the penalty after Amigo showed it would have caused “serious financial hardship” for the company, and threaten its ability to fulfil an already slimmed-down compensation scheme that is offering about 41p for every pound owed to mistreated customers.
Amigo – which charged 49.9% interest and required borrowers to provide a friend or family member to act as a guarantor – has continued to warn that it is on the brink of insolvency, despite restarting lending under a pilot scheme in October.
Amigo’s chief executive, Danny Malone, said: “I would like to apologise again to any customers impacted for the past failings in lending practices 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
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