FCA response to Amigo’s Scheme being rejected by the High Court

The Court has refused to sanction the Scheme of Arrangement proposed by Amigo (the Scheme). The FCA had objected to the proposed Scheme and is now carefully considering the Court’s judgment and Amigo’s response.

The FCA has, through its continued engagement with Amigo and participation in the Court hearing, sought to get a better, fairer deal for Amigo’s customers due redress. We believe that a fairer compromise could have been offered to customers, but was not.

The FCA considered it necessary in this case to share with the Court its view that the Scheme as proposed was inherently unfair, as it placed a disproportionate burden on customers, as opposed to shareholders and bondholders, to keep the company afloat.

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 regulated firms must maintain adequate financial resources which includes taking account of the need to pay redress liabilities. We have significant concerns about Schemes of Arrangement being used by firms to unfairly avoid paying customers redress.

Firms should be regularly assessing the adequacy of their financial resources and report to us immediately if they assess they are or will be in financial difficulty. To understand our expectations for their assessments, firms should refer to the FCA Finalised Guidance on assessing adequate financial resources.

This is an important judgment and any firm considering a scheme of arrangement should take it into consideration.