LOAN company Amigo has warned it is “highly likely” to go into administration if it loses a court challenge next week over its plans to cap compensation over claims of mis-selling.

The Bournemouth-based business won the support of 95 per cent of creditors who took part in a vote on its proposals.

But the Financial Conduct Authority (FCA) will oppose the plan as unfair when the proposal goes before a court on Wednesday, May 19.

Amigo lends money at 49.9 per cent annual percentage rate (APR) to people who can find someone to guarantee the loan.

It has faced a flood of mis-selling complaints and has said many came through claims management companies.

Its proposed “scheme of arrangement” to limit compensation payouts won the support of 95.09 per cent of creditors, representing 95.72 per cent of the claim value involved.

Creditors backed the scheme by 74,877 votes to 3,863, representing values of £230.74m in favour and £10.32m against.

The scheme needed approval from more than 50 per cent of creditors, representing at least 75 per cent of the value of the claims of those who voted.

But the FCA has said the scheme has been proposed without any negotiation with claimants. It says compensation would be “significantly reduced” while other stakeholders such as shareholders “are not being asked to contribute their fair share”.

Amigo chief executive Gary Jennison said: “Our customers have voted overwhelmingly in support of the scheme, showing that customers due redress believe that the scheme is the fairest and best option for them. We are naturally disappointed by the FCA’s stated intentions to oppose the scheme.

“If the scheme is not approved by the court, then Amigo is highly likely to enter into administration. This will deny mis-sold customers access to a share of the compensation to which they are entitled and will also have a significant impact on the many millions of UK adults who cannot access mainstream credit.

“The new board and management hopes that the voting and views of Amigo’s past and present customers are listened to and they are not denied the compensation they are entitled to.

“We strongly believe that the scheme is the best for all our customers – past present and future – and the only way for Amigo to continue to be part of the solution for providing financial inclusion in the UK.”

The FCA has said the scheme will see compensation “significantly reduced” while other stakeholders such as shareholders “are not being asked to contribute their fair share”

A spokesperson said: “Our work on high cost credit has been designed to protect some of the most vulnerable people in society. Many firms have received a large number of complaints about the past affordability of their loans, which has created pressure on firms’ finances and funding. While firms exiting the market can have an impact on the availability of credit, lending money people cannot afford to pay back causes significant harm to individuals.”