Best crisis management campaign
Helping Amigo Loans survive
Amigo Loans is a guarantor lending, which offers loans to customers who may not have a perfect credit score and would struggle to get funding from high street banks. But in July 2021, Amigo Loans appointed agency Lansons after it got into funding troubles of its own and its survival seemed in doubt.
The Bournemouth-based sub prime lender had been hit by a raft of complaints from customers claiming that it had been reckless as it had failed to adequately check whether they could afford the repayments.
It had lost more than 98 per cent in value since its 2018 listing on the London Stock Exchange, and was no longer able to lend money as it was technically bankrupt because it owed so much in compensation.
The only way that Amigo Loans could survive was through a Scheme of Arrangement, which would mean that it need only repay a fraction of the claims owed. It proposed paying just 10 pence per £1 owed. However, the scheme required court approval, which was not forthcoming, after being opposed by the Financial Conduct Authority (FCA) who claimed it was ‘inherently unfair’.
In May 2021, Amigo turned to Lansons for a ‘last throw of the dice’ to survive. Working alongside law firm Freshfields and PwC, the agency devised a new strategy that would draw a line under the past, rebuild relationships and addressed all the concerns of the FCA.
The four-pronged strategy focused on reframing Amigo Loans’ relationship with the FCA, but also – recognising that the regulator was accountable to the Treasury – establishing relationships with the Treasury and regularly engaging with political figures, such as the City minister and local MPs.
And, as the regulator and politicians are influenced by the media, a more proactive strategy was required, throwing out Amigo Loans’ previous ‘minimise everything’ approach. The final strand was to boost the terms of the Scheme of Arrangement, which the court had said was not sufficiently generous.
Revised messaging focused on the fact that ‘old management’ caused the issues, making ‘terrible decisions’. Similarly, Amigo’s purpose was re-framed around creating ‘financial mobility’, with the suggestion that borrowers could turn to illegal loan sharks if it ceased trading.
A representative committee of customers owed compensation were also appointed, and worked with Amigo Loans in determining the shape of the new Scheme of Arrangement. Other stakeholders, such as Martin Lewis’ Money Savings Expert website, were also kept in the loop on developments.
Chief executive Gary Jennison became proactive in giving media interviews, starting off with a full page spread in the Sunday Times, appearances on Radio 4 Today, in which he stressed the need for businesses like Amigo to survive, and other national publications. In total, there were more than 110 articles on Amigo in national business sections, the tone of which changed from hostile to neutral (and occasionally positive).
The strategy appeared to work. On 11 April 2022, the FCA said that it would not oppose Amigo’s revised Scheme of Arrangement and that, if it achieved High Court approval, the business could resume lending.
On 13 May, Amigo announced that 145,000 creditors, 89 per cent of those eligible to vote, had approved a new, more generous £112 million Scheme of Arrangement, which will pay around 42 pence for every £1 owed. The High Court accepted the scheme, which returned Amigo to a more stable footing as a solvent company. It resumed lending again under the brand name RewardRate, dropping Amigo from the consumer market.