In February 2023, the FCA publicly censured Amigo Loans Ltd, via a Final Notice, for failing to conduct adequate affordability checks on its borrowers and guarantors.
Between 1 November 2018 and 31 March 2020, Amigo, a specialist non-prime guarantor lender, did not have appropriate processes in place to ensure it adequately assessed borrowers’ and guarantors’ circumstances before approving a loan. Amigo’s failures led to a high risk of consumer harm to borrowers and guarantors.
Amigo’s assessment of whether customers could afford to borrow was inadequate. The firm’s lending decisions relied heavily on the use of a complex IT system with a high degree of automation. However, design issues and insufficient controls meant that the system processed loan applications in circumstances where the loan was potentially unaffordable for the customer. Although the system raised flags for manual review in some instances, often staff did not sufficiently consider information provided by customers or probe the information they were given before approving a loan.
These issues were accentuated by a failure by Amigo to adequately consider credit lending compliance, and regulatory requirements around affordability and to act sufficiently on the findings of a number of internal and external reviews which identified weaknesses in its approach to the assessment of affordability and creditworthiness. These failings meant there was an increased risk that guarantors would have to step in.
The FCA investigation also found that Amigo had failed to maintain adequate records of its historic business processes. As a result, on repeated occasions, it was unable to provide adequate responses to the FCA’s questions. It also negligently deleted the email accounts of former staff members, which hampered the FCA’s investigation into their credit lending compliance.
Thistle Initiatives has supported firms for over 10 years as a trusted compliance and regulatory advisor. In addition to assisting you as and when our team of specialists can serve as your right hand in a meeting and complying with regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.
Are you looking for help with your FCA credit lending compliance, regulation arrangements, affordability assessments, fair treatment of customers, or more general regulatory questions? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 0207 436 0630 or sending an email to info@thistleinitiatives.co.uk.