Amigo affordability case is ‘wake-up call’ for car finance houses

A legal expert has warned car finance houses to double check their consumer borrowing affordability assessments to ensure they are “robust and appropriate”.

Partner and Head of Financial Services at national law firm Freeths, Adam Edwards said the FCA censure of Amigo Loans was a wake-up call for lenders.

Sub-prime lender Amigo Loans was censured by the FCA for failing to conduct adequate affordability checks on borrowers and guarantors.

It narrowly missed a £73m fine because imposing it would have threatened its ability to meet consumer redress commitments under the Scheme of Arrangement.

“The Financial Conduct Authority’s public censure of Amigo should cause lenders to be double checking their affordability assessments to ensure they are robust and appropriate.

“Due to the current cost of living crisis and in preparation for the implementation of the consumer duty, we anticipate affordability assessments to be in the spotlight with the regulator throughout this year.

“As such, now is the time to carry out a full assessment of the arrangements you have in place,” he said.