Borrowers who believe they have been mis-sold loans by sub-prime lender Amigo may see payouts capped under a new plan.

Amigo wants anyone whose complaint is yet to be resolved to take a proportion of a pot set aside for compensation. The lender has been receiving a deluge of claims for redress in recent months - a trend that has caused the demise of other big names in the sector. Amigo has 150,000 current customers, and 500,000 past customers. That makes it the biggest operator in the market, having been offering loans to people who are cash-strapped but who give the name of a guarantor to step in to cover any unpaid repayments.

Its future has been in doubt, with the business embroiled in a boardroom battle. It stopped all new lending in November. The sub-prime lending sector as a whole has faced a blizzard of complaints from customers who believe they were approved for loans which they could never afford to repay. The regulator says that a loan is unaffordable if making the repayments means someone has to borrow more money or get behind with essential bills. Amigo has seen a "high level" of complaints during 2020, and there are no signs of this trend slowing down.

Source: BBC Business