Red alert to suppliers of Amigo as the money lender admits it could go bust

Red alert to suppliers of Amigo as the money lender admits it could go bust

ICSM has issued a red alert to suppliers of the money lender firm Amigo after it admitted it could go out of business as its losses mounted.

The company’s CEO Gary Jennison said the rising costs of paying compensation for mis-selling products was the problem as it now faced a bill of £345 million. He said: “"The issues of the past are real, but do not diminish the need in society for lenders like Amigo. Amigo allows ordinary people, excluded by banks and other mainstream credit providers, to access mid-cost finance when they are funding life essentials and to stay away from much higher-cost payday or illegal lenders."

Amigo revealed a jump in annual losses to £284m, compared with £38m last year while in May, ICSM reported that the High Court rejected its plan to set aside a separate pot of money for compensation. The high profile advertising campaign had made the firm a household name but with interest rates of up 49.9% the loans offered to people with no chance of managing to repay the loans had brought about its downfall. When compensation claims were lodged the courts sided with their customers and decreed the money lender face fines.

Initially Amigo wanted to set aside a separate pot of cash to deal with the claims but this was rejected by the court.

Cynics believed it was a plan to fold the separate compensation firm once it was in business and thus avoid the main business having to foot any bills.

Ian Carotte of ICSM said this was a clear warning to suppliers not to give credit to Amigo as they were on the brink of insolvency. He said: “Our information is that the regulator, the Financial Conduct Authority said the loans were unaffordable hence the claims. Then Amigo made an offer which would have seen customers receiving only a few pence in the pound before and if the separate company was wound up.”

Amigo have launched an appeal and have made a new offer to the court and the Financial Conduct Authority.

Ian Carrotte said that if the new offer is rejected the Amigo is expected to collapse.

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