BOSSES at Amigo Loans believe they could save its 200 Bournemouth jobs and start lending again under a “very different” model if a bid to salvage the business is approved.

Amigo hopes to win approval for a new scheme to limit compensation to customers who have complained of mis-selling – and warns it will go insolvent without an agreement.

The company put new lending on hold last year but says it has 25,000 visits a month to its website to see whether it is offering loans again.

It says it will be able to allocate more money than previously thought to compensating customers, after the Covid crisis proved less severe for household budgets than it expected. It has also had another year to collect payments on loans since it was forced to stop lending.

The company made a statutory profit before tax of £2.1million in the six months to September 30 this year, after a loss of £62.6m in the same period last year.

Amigo set up an independent customer committee after the High Court rejected a previous attempt to cap compensation. It consulted committee members over whether they would want a share of the business or its profits.

Chief executive Gary Jennison told the Daily Echo: “It turned out they didn’t want either of those two options. What they wanted is immediacy of cash, as much cash as possible and as quickly as possible, so they don’t want a share in the future value of the business, they just want paying out and so that’s what we’ve gone along with.

“Hopefully we’ve got a scheme now which is what the customer committee wants.”

He said the new scheme needed to be signed off by the customer committee and the Financial Conduct Authority before being submitted to the High Court.

Amigo has always offered loans at 49.9 per cent annual percentage rate (APR) to people with a friend or relative to act as guarantor.

But bosses have been working on a new business plan, offering three product lines including two under a new brand name.

Mr Jennison said: “It’s going to offer unsecured personal loans without a guarantor. It’s going to offer, within the new brand, a guarantor loan as well. And it’s going to offer the old Amigo brand, so we can fulfil a much broader range of needs than we ever could before and most importantly help people repair their credit score.”

Customers would be offered an annual payment holiday and the chance to reduce their interest rate three times over the life of a loan, from 49.9 per cent to 34.9 per cent.

He acknowledged times were difficult for Amigo staff in Bournemouth, whose numbers have dropped from more than 300 to around 220.

“It’s a big problem. That’s why we need to be allowed to get back to lending quickly so we can breathe life back into the business and help this customer grouping that needs us,” he said.

“When we do get back to lending, say in the summer next year, it’s going to be small because we won’t have any debt facilities to be able to finance the business. We can only lend from cash resources, which will be quite low-key,” he said.

“But that will allow us to prove the concept, prove to the regulator we’re doing it very differently and that we’re a different business, we’re not the old Amigo, we’re doing it in a new way and the best way. And then do a little bit of lending, get some debt facilities we can grow again. Because there’s a demand out there.

“Twenty-five thousand people every month hit our lending page on the website – ‘Is Amigo lending?’ There’s nowhere for them to go. So many of them are going to the unlicensed sector because they have no choice in the matter.”

He stressed that the senior management of Amigo had changed since it amassed the complaints. “None of us have made anything out of it, none of us caused any problems and we’re trying to save the jobs of 200 people,” he said.

“So you can punish Amigo Loans Ltd, yes, but to what purpose?”

Amigo’s new business scheme would rely on raising more equity, which would dilute the value of existing shareholders’ stake unless they took up an offer to sell them more.

Mr Jennison said: “The likelihood of a potential material dilution for shareholders is a difficult but necessary consequence of our situation. We have noted on many occasions, we are an insolvent business so there are no easy paths if we want to avoid administration and the only other options are for a managed wind-down or insolvency, both of which are worse outcomes for shareholders and customers.”