Controversial money lender, Amigo Loans, took yet another U-turn last week as the FCA declared that the lender cannot pay dividends to directors without their permission.
The Bournemouth-based lender which was valued at almost £1 billion last year has been battling with the FCA over the last year following a surge of compensation claims to former customers.
The Amigo share price has fallen from 70p in January 2020 to just 9p in October 2020 following a huge number of refunds paid to ex-customers who struggled to pay due to affordability measures. Equally, the company founder, James Benamor has been very outspoken on social media, criticising the company’s lending practices, the senior staff and its board, once claiming that the company was committing ‘slow motion suicide.’
Owned by The Richmond Group, the company has said it had entered into an “asset voluntary requirement” or “VReq” with the FCA which means payments to directors or dividends to shareholders must first be approved by the regulator first. Thus, implying that directors and shareholders will not get a large payout this year – and that redressing existing claims is more of a priority.
Amigo Loans rose to notoriety as a guarantor lender, offering loans of up to £10,000 at around 49% APR – with borrowers requiring a guarantor to co-sign their loan agreement. Founded in 2005, the company owns around 90% of the guarantor lending market, followed by UK Credit, Bamboo and George Banco. The company claims to have serviced over 200,000 customers to date.
However, the mountain of compensation claims from previous customers has placed further challenges on the company’s position, especially in an uncertain economy where most lenders paused any funding during coronavirus.
The role of claims has impacted other lenders in the UK, with the likes of Wonga, The Money Shop, QuickQuid and Uncle Buck – all falling into administration in the last 18 months.
To make a claim against Amigo, you simply need to provide information about your loan and why you struggled to repay. The application process is often quick and straightforward and you will typically get a decision from Amigo within 6 to 8 weeks or sooner. In addition to a full refund of your loan amount and interest, you will also be given 8% interest on top as compensation, assuming that you have been approved.
Amigo commented last week that “We (Amigo) have adequate liquidity to continue to fund operations and support its customers.
“The board continues to be focused on addressing Amigo’s legacy issues, restoring confidence in its corporate governance and building a sustainable business for the long term.”