Amigo warns of ‘material’ hit from new wave of complaints
Amigo has warned of a “substantial increase” in complaints pouring in after reaching a £35m deal with the financial regulator to clear a backlog of thousands of customer issues up to June.
The loans provider has set aside £35m to deal with around 9,000 complaints received in 2020 under a deal with the Financial Conduct Authority (FCA).
But today Amigo warned it would need to renegotiate the voluntary requirement with the regulator after the rate of complaints increased in June.
“Since our announcement on 8 June, Amigo has continued to see a substantial increase in the rate of complaints,” Amigo said in a statement.
“The company is currently in discussions with the FCA to reach agreement on a variation of the VReq. The variation is anticipated to agree to extend the date of completion beyond 26 June 2020 and a corresponding expansion of the backlog of complaints to be resolved.”
Its £35m payout has already killed off any hope of a dividend for the 12 months to March.
And Amigo warned the new wave of complaints could produce another financial hit.
“The additional cost of complaints received subsequent to 31 March 2020 is expected to be material, as a result of the substantial increase in the rate of complaints received,” Amigo said.
The company offers loans to people with poor credit ratings if they secure a guarantor who will pay the loan if they default.
But its business model is under question as it admitted to thousands of customer complaints. Earlier this month it took itself off the market after talks with a potential buyer fell through.
The FCA is also investigating it over its creditworthiness assessment process and oversight.
Amigo survived a boardroom coup attempt by shareholder Richmond Group earlier this month to oust the board and appoint two new directors.
The pressure has pushed Amigo’s share price below 10p, down from around 73p at the start of the year.