Money lender Amigo is warning it may not survive after revealing it faces a £345m compensation bill for mis-selling claims.

The business, which lends money to people with poor credit records, also revealed a jump in annual losses to £284m, compared with £38m last year.

In May, the High Court rejected its plan to set aside a separate pot of money for compensation.

Amigo had faced a deluge of complaints the company had mis-sold them loans.

The company, which offered loans with an interest rate of up to 49.9%, was forced to stop lending last year after thousands of complaints from customers who say they were approved for loans that they could never afford to repay.

A host of these complaints have come via claims management companies.

The regulator, the Financial Conduct Authority (FCA), 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 tried once to negotiate a settlement that would have seen those customers get pennies on the pound, but it was rejected by the High Court in May.

The company is preparing to present a new proposal to the FCA and the High Court. If this next offer is rejected, it is likely to go under.

Boardroom bust-ups and rows with the regulator have not helped but, fundamentally, Amigo is facing a challenge that has brought down other big names in the sector.

These results reveal the huge compensation bill it faces for historic mis-selling of loans. The influx of complaints for advancing money to people who had little chance of repaying has already spelled the end to Wonga and others.

If Amigo were to collapse, then plenty of borrowers will believe this is a company that has reaped what it sowed.

Yet, there will be concern too among those who struggle to borrow from mainstream lenders that their options continue to shrink.

In the results statement, which was originally due to be made in July, the company said there was a "material uncertainty" around its ability to continue as a going concern.

Gary Jennison, Amigo's chief executive said he was keen to save the company, as it offered essential finance to those who could not access mainstream lending.

"The issues of the past are real, but do not diminish the need in society for lenders like Amigo," he said.

"Amigo allows ordinary people, excluded by banks and other mainstream credit providers, to access mid-cost finance when they are funding life essentials and to stay away from much higher-cost payday or illegal lenders."

Source: BBC News