FCA has publicly censured Amigo Loans Ltd following a finding that it did not have appropriate processes in place to assess borrower and guarantor circumstances before granting loans for a period of around 18 months. FCA said the failings meant some loans were unaffordable for the borrowers, who included vulnerable customers, and guarantors had to step in. It also said the effect was to prioritise the firm’s commercial interests over those of customers. Amigo’s business model of guarantor lending meant that it needed to make affordability assessments in relation to both the borrower and the guarantor, and relied heavily on IT systems with a high degree of automation to do so. However, the system often both processed applications when the loan was potentially unaffordable and, when it did raise flags, staff did not properly consider or probe information before approving a loan. This was all exacerbated by Amigo failing to act on the findings of several reviews.
FCA said the breach merited a fine of £72,900,000 but such a fine would have caused the firm serious financial hardship and would have threatened its ability to meet its obligations under the scheme of arrangement it has in place to pay redress to its customers.
FCA also commented that Amigo had not kept records of its historic practices so could not provide answers to FCA’s questions, and had deleted email accounts of former staff members, which also hampered the investigation.