Shares in troubled Amigo Holdings plunge to a record low as customer complaints flood in
Shares in troubled Amigo Holdings have plunged to a record low as customer complaints flood in.
The controversial lender, dubbed a ‘legal loan shark’ by MPs, said it was back in talks with the City watchdog over how it would clear the enormous backlog of grievances.
Just last month, Amigo said it had agreed with the Financial Conduct Authority (FCA) to enter into a so-called voluntary requirement, to make a speedy decision on around 9,000 complaints which had piled up.
The process was due to complete this Friday, but yesterday the firm announced it had seen a ‘substantial increase’ in the number of complaints coming through this month, and was in talks with the FCA to alter the terms of its voluntary requirement.
It added the cost of resolving these issues would be ‘material’, prompting investors to take flight. Shares tumbled 23.5 per cent to end the day at a record low of 7.5p. Amigo founder James Benamor will feel vindicated after warning earlier this year that customer complaints would be a huge issue for the company.
Amigo provides loans to those with a poor credit score, provided they have a friend or family member willing to repay the bill if they can’t.
But Benamor, who briefly returned to Amigo’s board this year before quitting again, cautioned that its lending activity was breaching updated rules on responsible lending.
He accused the company’s board of committing ‘slow motion suicide’, and said that unless Amigo decided to challenge the new rules, it would have to admit that it may be forced to pay billions of pounds in redress to customers.
Amigo denied his claims. But at that start of this month, it conceded that the FCA was investigating whether it properly assessed customers’ ability to repay their loans.
Benamor, who still owns around 60 per cent of Amigo’s shares, last week lost a shareholder vote to oust the board and win back control for himself.
The father of eight is now washing his hands of the company he founded in 2005, selling 1 per cent of its shares every day until he has no stake left.
Amigo has slumped 97 per cent since it floated two years ago at the price of 275p per share.