Watchdog Financial Conduct Authority Launches Probe into Amigo Loans

  • Jun 03, 2020 BST
  • Team Kalkine
Watchdog Financial Conduct Authority Launches Probe into Amigo Loans

The Financial Conduct Authority (FCA) has launched an investigation into the Guarantor Lender Amigo Loans, confirmed LSE-listed Amigo Holdings on Monday. The investigation has reportedly been ongoing due to the gradual acceleration of disagreement between the company's panel and its owners. Amigo reported in its statement that the Financial Conduct Authority unbolted an investigation to ensure whether or not the Amigo’s credit checks for loan on borrowers were undertaken in line with the lending rules. It includes the inspection of loans granted from November 2018 to date.

The Bournemouth-based company is famous for lending guarantor loan of up to £10,000 to borrowers with poor credit history with the guarantees backed by borrowers’ family or friends on lenders request. It is broadly driven by huge revenue goals as the lender charges as high as 49.9% interest rates on these loans.

On Monday, the company announced news regarding the filing of an application for injunction of Richmond Group Limited to prevent their voting approval to sign up Sam Wells and Nick Makin as directors of Amigo eliminating present associates of the board to be proposed in the upcoming general meeting as to be held on 17th June 2020. Chairman Stephan Wilcke moved out following the exit of Amigo’s Chief Executive Officer Hamish Paton. He further stated that the board of the company suggested leaving, but it must route through an arranged procedure. The information about the inquiry came with an escalation in a dispute with the founder James Benamor who stepped down from the Board just three months after he made a comeback to the boardroom. However, he still maintains approximately 60.6 per cent of the company’s holdings, which is reportedly observed for expelling Amigo's whole board for what he claims in the mismanagement of the business.

Benamor put up the company for sale in January, raising alarms the company was being run with deteriorating standards leading to ‘irresponsible’ lending. Benamor also stated that a transformation in how the Financial Regulator Service clear irresponsible loaning has made it harder for the company to float new loans and could need around £1 billion in compensation payments. Amigo's board has a responsibility towards consumers and investors to adhere to regulatory powers, and should be aware about the company's current situation, Benamor wrote in the blog. They must instantly terminate loaning, pile up the book, settle debts, and carry on with legal evaluation. However, Amigo has disproved Benamor's statements. The company has been pushing itself to sell during the course of the argument with Benamor. The company said in the previous week that it had expected a £100 million proposal from an anonymous acquirer. But Benamor has stated that he will not be backing the project. The company declared that it continues to look out for the possible acquirer and negotiations related to the terms of any proposal. However, there can be no safe bet that the project will be approaching nor as to the terms on which some suggestion will be completed.

In January 2020, the company had stated that after the Benamor’s Richmond Group investment arm revealed that it was seeking to sell off around 61 per cent stake in the company, which had started a proper process for sale after initiating a strategic assessment. However, for the entire process, the company’s board had appointed RBC Capital Markets as its financial consultant with the aim of a strategic evaluation followed by a sale of parts of the business.

According to the media report, the value of the company was estimated at around £1.3 billion during the time of listing in June 2018 on the London Stock Exchange. But the worth of its shares had dropped severely by nearly 80 per cent because of enormous scrutiny from the UK’s controller, i.e. the Financial Conduct Authority, and a deteriorating economic situation. However, during the initial month year 2020, the company was assured in the boosting of its tactic to loaning decisions. The company was worried about the chance of increasing scrutiny and continuous growth in the approach of the Financial Regulator. In November 2019, the Financial Conduct Authority had decided its evaluation of the sector for guarantor loans in which it instructed the company that it had to more clearly define the threats to the family and friends of its clients when they are ready to accomplish the role of guarantors.

Let’s talk about the overview of the Amigo Holdings Plc and its share price performance

Overview of Amigo Holdings Plc

Amigo Holdings Plc (LON: AMGO) is a loan provider company of the United Kingdom, which delivers guarantor loan and provides sales financing services to the seekers. The company was incorporated in the year 2005 and has developed itself to become the British’s major provider of guarantor loans. The company’s guarantor loan product has permitted mortgagors to reconstruct their credit scores and enhance their capability to access credit from conventional financial service delivery in the future.

The share price performance of the company –The stock price of Amigo Holdings Plc last traded at GBX 18.68, down 1.68 per cent, on June 2 as compared to the to the previous closing price of GBX 19.0. The company’s one year high/low price is GBX 297.50 / GBX 10.48, which were reported on 11th June 2019 and 17th March 2020, respectively. The shares outstanding of the company have been reported to 475.33 million, and the market capitalisation is reported at GBP 90.31 million as at the end of last trading session on 02nd June 2020.


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