Last week shares in the firm tanked 34% leading it to temporarily halt share trading.
The lender, which charges a 49.9% APR, has been in the crosshairs following concerns that as many as one million of its customers could have seen their compensation capped at between 5% and 10% if they were found to have been mis-sold a loan.
Amigo had gone to the High Court to cap the compensation pool at a maximum £35m and 15% of profits over the next four years.
Creditors had initially voted in favour of the scheme but the proposal was scuppered following the Financial Conduct Authority’s (FCA) objection to the scheme in court.
Following the judgment, the FCA said: “The FCA had objected to the proposed Scheme and is now carefully considering the Court’s judgment and Amigo’s response.
“The FCA has, through its continued engagement with Amigo and participation in the Court hearing, sought to get a better, fairer deal for Amigo’s customers due redress. We believe that a fairer compromise could have been offered to customers, but was not.
“The FCA considered it necessary in this case to share with the Court its view that the Scheme as proposed was inherently unfair, as it placed a disproportionate burden on customers, as opposed to shareholders and bondholders, to keep the company afloat.
“The FCA believes that Amigo can propose a fairer scheme to customers.”
Amigo is just the latest lender to face mis-selling allegations. In 2018 Wonga, arguably the biggest name in the space, hit the skids after being swamped with compensations claims following a mis-selling scandal.
