The Financial Conduct Authority has set the stage for Amigo Loans to potentially resume lending, saying it will not oppose the group’s new financial plan when it comes to court this week.

The watchdog’s decision not to step in at this stage is an important step for the struggling payday loan company after rejecting a previous proposal, although it is just one of many obstacles to a full-scale recovery.

Amigo, which lends to people with bad credit histories, will present a plan of arrangement to the High Court on Tuesday, making a broader offer to creditors and detailing terms for a new business model and a return to lending.

The FCA said it would not oppose the plan but did not rule out intervening in the new plan of arrangement in the future.

He added that if the program is sanctioned by the court and the loan conditions are met, the company could start lending again. “If the company were to return to lending, the FCA would continue to monitor it closely,” he said.

Amigo ceased lending in November 2020, citing uncertainty surrounding the pandemic, and was unable to resume activity due to a fight for compensation for historic mis-selling.

The company has faced complaints from consumers who accused it of not checking whether their loans were affordable.

“There are still significant hurdles to overcome before Amigo can manage its insolvent balance sheet, but this information will help us take the next step to achieve the best possible outcome, given the circumstances,” said Chief Executive Gary. Jennifer.

Amigo’s share price soared 117% in morning trading on Monday, although it is still down 80% since May when the FCA rejected an earlier proposal.

In its latest results, Amigo said the board concluded there was material uncertainty about its future as a going concern. The company reported a pre-tax loss in the three months to December 2021 of £500,000, compared to a loss of £18.7million a year earlier.

The new scheme would offer £97m to creditors. He is reportedly looking to raise a further £15m through a rights issue for the scheme and fund further loans.

This month, Amigo announced it had accepted a request from Jennison to rescind a long-term $9.5 million equity award following criticism raised at last year’s hearing.

Amigo’s struggles mirror problems across the industry in recent years as the regulator cracked down on so-called non-standard finance providers amid concerns of a cycle of debt addiction.

The number of active short-term high-cost lenders in the UK fell by almost a third between 2016 and the third quarter of 2020, according to FCA figures.

Previous

Jimbeau Hinson, iconic country music songwriter, died on Friday

Next

2022 'American Idol' Auditions: Who Are the Best Singers?

Check Also