BOURNEMOUTH-based lender Amigo is proposing to raise £40million in capital as it finalises plans for a pilot scheme that could see it return to lending.

The capital raise, to be completed in May 2023, is part of a customer redress scheme following probes from regulators into complaints of mis-sold loans.

The scheme won the vote of 88 per cent of creditors and was approved by the High Court in May.

Under the scheme, Commercial Road-based Amigo is required to deliver an initial contribution of £97m. Amigo said it expects to meet the contribution. It noted it currently has unrestricted cash of £125m.

Amigo also will look to raise debt to support growth.

Another condition of the scheme is that Amigo returns to lending by February. The company noted that the UK Financial Conduct Authority has "yet to approve our return to lending". However, following a long period of review and discussion, the company is finalising details of a lending pilot.

During the pilot, Amigo will be undertaking "significant testing" to ensure that it is lending affordably. "We continue to discuss our approach and implementation with the FCA to achieve these goals as soon as possible," it said.

The company announced a new lending product in June, the RewardRate brand, designed to meet demand for "competitively priced, mid-cost, specialist credit products".

Amigo said it has the "right values and operational processes in place" and it was "confident the mistakes of the past will not be repeated".