LOAN company Amigo has submitted a new bid to save the business by capping compensation paid to customers who complained of mis-selling.

The Bournemouth-based lender – which has cut staff numbers from around 300 to 220 – has previously warned it will become insolvent unless it can win approval for a scheme to limit payouts.

It has submitted a new ‘scheme of arrangement’, along with a business plan, to the Financial Conduct Authority, ahead of its annual general meeting on Wednesday morning.

The company was built on lending money at 49.9 per cent annual percentage rate (APR) to customers who could find a friend or relative to guarantee the loan. But it has put new lending on hold while dealing with a raft of complaints of mis-selling.

A statement due to be read at the AGM says: "Collections have remained robust since the end of the year. While we continue to see increased levels of arrears, predominantly from customers exiting Covid-19 payment holidays, overall collections have been robust since the end of the year and remain encouraging. Combined with effective cost management, this has given the Company a current unrestricted cash position of £229milion.

“The Company continues to operate within significant financial constraints. New lending is suspended. The current net loan book, after impairment, is approximately £235m. At the time of the full year results we estimated that the total of balance set-off adjustments and associated costs would be approximately £100m. The Company will incur future operating costs to collect out the remaining loan book. The current annual overhead costs are approximately £25m. While securitisation borrowings are now fully repaid, senior secured notes of £234.1m remain outstanding with an attached annual interest cost of £17.9m.

“Work to progress a new Scheme of Arrangement continues, with ongoing engagement with both the Independent Customers’ Committee (ICC) and the Financial Conduct Authority (FGCA). While progress has been slower than originally anticipated, it is critical that we listen to the voice of our customer, as represented by the ICC. On September 28, 2021, Amigo submitted a revised Scheme proposal, incorporating feedback from the ICC, along with its future business plan to the FCA and the ICC. “The Board remains committed to pursuing a solution that enables Amigo to satisfy its obligations to all stakeholders in the most equitable way possible and to returning to providing the opportunity for financial inclusion to the many in society who are locked out of finance by the mainstream providers.”

In August, Amigo chief executive Gary Jennison said he was “working hard” to save the company and its jobs after a “dreadful” annual loss of £283.6m.

Earlier this year, the High Court sided with the FCA by rejecting Amigo’s first attempt to cap payouts to customers who complained of mis-selling.

Mr Jennison has spoken of his plans for a more “customer-centric” Amigo, which could lend money without a guarantor and reduce interest rates for customers who paid on time.