With news breaking that the High Court rejected Amigo’s scheme of arrangement, the FCA has responded by reaffirming its view and answering some common questions that customers may have.
In a response to today’s announcement ( Amigo share price crashes as high court rejects scheme of arrangement ), the FCA noted that a fairer compromise could have been offered to customers but was not in its view.
Explaining its stance, it added that the scheme was hugely unfair in that it it placed the burden on customers to get it out of trouble with regards to redress as opposed to focusing on shareholders and bondholders to keep the firm trading.
Interestingly it added:
“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 response to Amigo’s scheme being rejected by The High Court
It then proceeded to enter a couple of key questions that customers may have including that customers can still complain to Amigo should they have a loan-related complaint still. It added that should Amigo go into insolvency then claims will be assessed in line with insolvency law.
Further explaining its stance on the matter, the FCA noted it wasn’t happy with the scheme of arrangement being used as a vehicle to pay less redress:
“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.”
Amigo shares: daredevils need only apply
It has been a roller-coaster of a ride for long and short term investors in Amigo.
Today’s decision, while largely expected shows the reality of the situation for investors.
One would hope and expect that Amigo comes up with a revised plan that is workable rather than go through a prolonged appeal to a scheme which has strongly been rejected by the High Court and the FCA.
Even still, it is likely that this plan would ‘punish’ shareholders further as per the FCA’s stance on the matter.