* Watchdog argued for a better deal for customers
* Amigo had warned it could collapse
* Company considering its options, including appeal
(Adds further context, updates shares)
By Kirstin Ridley and Iain Withers
LONDON, May 25 (Reuters) - Britain's High Court has rejected
a rescue plan from subprime lender Amigo that would
have cut compensation payouts to customers for mis-selling
loans, sending the company's shares plunging more than 50% on
Tuesday.
Britain's Financial Conduct Authority (FCA), which opposed
the scheme in court, said it thought Amigo could propose a
fairer deal for customers.
Subprime lenders in Britain have been hit by a regulatory
clampdown in recent years that has led to a wave of claims, and
in some cases compensation payouts, for mis-selling loans. The
effect of the COVID-19 pandemic has added to the strain.
Amigo had applied to the High Court for permission to cap
payouts, saying a surge in claims threatened it with collapse.
Amigo's shares tumbled as much as 61% in early trading.
The lender said its board was reviewing all options
including an appeal after the court's decision.
The FCA said other finance firms should take account of the
judgment, adding it had "significant concerns" about schemes
being used to unfairly avoid paying customers redress.
Amigo specialises in guarantor loans, providing finance to
customers with poor credit histories if they are guaranteed by a
friend or family member.
Rival Provident Financial quit its around 140 year
old doorstep lending business earlier this month.
Amigo's plan had drawn criticism from politicians and
consumer groups.
Around 95% of votes cast by current and former Amigo
customers ahead of the court hearing were in favour of the
proposal.
The court said in its judgment it agreed with the FCA that
Amigo did not face an imminent liquidity crunch and urged the
company to propose a fairer scheme that spread losses with
shareholders.
The court said customers lacked the necessary information or
experience to assess potential alternative options when voting
on the scheme.
(Reporting by Kirstin Ridley and Iain Withers. Editing by
Rachel Armstrong and Mark Potter)