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Controversial lender Amigo to resume under new brand after two-year break

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·Business Reporter, Yahoo Finance UK
·2-min read
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Amigo loans illustration. Photo: Amigo
After spending a year swamped with complaints and court battles, it is now looking to provide new loan products under a different brand, RewardRate, by February next year. Photo: Amigo

Sub-prime lender Amigo saw its shares rise on Tuesday after it set out plans to return to the market after a two-year hiatus.

The controversial lender previously had its reputation marred over claims that it mis-sold loans. It suspended guarantor lending in March 2020 in order to work through a backlog of allegedly unaffordable loans.

After spending a year swamped with complaints and court battles, it is now looking to provide new loan products under a different brand, RewardRate, by February next year.

RewardRate will offer two lending products, a personal loan and a guarantor loan, providing cheaper credit to those who pay back on time.

Borrowers will have the opportunity to reduce their annual interest rate by up to 15 percentage points. Amigo is planning to offer a personal loan that starts with a 49.9% annual percentage rate, while the guarantor loan begins at 39.9%.

Both products will give borrowers the opportunity to reduce the interest rate to 34.9% APR by making payments on time. They can also freeze a payment once a year, without incurring penalties.

However, the move is subject to approval by the financial watchdog, the Financial Conduct Authority (FCA).

The group is looking to raise money over the next financial year to help it hand money back to creditors. Last month it was also granted High Court approval for a rescue plan which included compensation for past customers.

Read more: FTSE hits two-week high as stocks rebound from recent rout

The company said it “aims to offer more affordable, responsible and flexible finance for underserved consumers who currently have few borrowing options”.

“RewardRate also seeks to provide a pathway out of higher cost finance to cheaper credit by enabling those who make their loan payments on time to reduce their APR by up to 15 percentage points,” it said.

“In shaping the proposition, Amigo’s new management team has taken learnings from Amigo’s past to ensure a customer-centric compliant and responsible culture is at the core of the business as well as an improved underwriting process with enhanced affordability checks for customers.”

Watch: How to save money on a low income

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