BOURNEMOUTH lender Amigo has seen its number of customers drop by nearly half after it paused lending and prepared plans to trade under a new brand name.

The company says it has passed a “turning point” after the High Court agreed a scheme to limit compensation payment to borrowers who complained of mis-selling.

Amigo, which has around 300 staff at its Commercial Road HQ, is talking to the Financial Conduct Authority (FCA) about returning to lending under a new brand name, RewardRate.

In the quarter to June 2022, Amigo had 61,000 customers, compared with 118,000 in the same period the previous year.

Revenue fell 68 per cent to £10.4m as the loan book was run down. Statutory profit was down 85.56 per cent to £2.2m as a result.

Amigo’s chief executive, Gary Jennison, said: “We continue to engage positively with the FCA around our return to lending. This is the next step in our recovery, ahead of a proposed capital raise and would enable a new start for the business having taken on board the learnings from the past.

“Our new lending proposition, under the RewardRate brand, aims to offer a more affordable, responsible and flexible option to underserved customers who currently have very few choices. By allowing customers who make their loan payments on time to reduce their APR by up to 15 percentage points, we aim to help customers achieve a better credit rating and move towards cheaper credit. We believe fair and responsible non-standard lending choices are vital to creating greater financial inclusion and mobility.”

Amigo says RewardRate products would offer “affordable, responsible and flexible finance” to some of the estimated 12million people in the UK who have few options to borrow.

Amigo had repeatedly warned that it faced insolvency unless the High Court sanctioned its scheme of arrangement to limit payments in mis-selling cases.

The scheme approved by the court in May included a condition that it would return to lending by February 26 next year, but Amigo said it aims to do so “far sooner”.

It intends to return to lending with a pilot project involving up to £35m, funded by existing resources. “We will not return to lending with our Amigo brand,” it said.

The business expects to raise capital to support future lending. Its scheme requires it to issue at least 19 shares for every existing share.

Mr Jennison said: “The three months ended June 30, 2022 have seen considerable progress in addressing Amigo’s historical complaints liability and in re-establishing Amigo as a provider of responsible finance to meet the needs of a growing underserved population.

“The sanctioning of Amigo’s Scheme of Arrangement by the High Court on May 26, 2022 represents a turning point for the business. The approval of the scheme will deliver the best possible outcome for creditors and enable Amigo to continue to play an important role in the mid-cost credit sector, at a time when the UK is facing an unprecedented rise in the cost of living and a further tightening of credit availability.”