Amigo to Be Investigated by FCA

The subprime lender Amigo is being investigated by the Financial Conduct Authority just months after being accused of irresponsible lending by its founder.

The City watchdog is currently investigating whether proper creditworthiness assessments had been carried out by Amigo before making loans to customers.

The investigation will cover the period of November 2018 up until the start of the investigation, and will also focus on ‘governance and oversight’ with regard to the credit assessments in question.

Following his resignation as chairman a few months ago, Amigo’s billionaire founder, James Benamor, launched a ferocious attack on the company. Benamor claimed that Amigo’s own internal complaints team would have viewed some of their lending practices as ‘irresponsible’.

Amigo is the largest provider of guarantor loans in the UK - giving loans to people who would otherwise have found it hard to borrow money, by using friends or family as guarantors.

Benamor, who still holds a 61% stake in Amigo, has called for a general meeting on 17 June in a bid to remove the entire board and vote in two of his preferred candidates to the positions of chairman and chief executive.

Stephan Wilcke, Amigo’s chairman, said: “The board has offered to leave, and will do so, but it must be through an orderly process. We cannot risk the Amigo group’s ability either to conduct its FCA regulated activities or to continue as a London-listed company operating in accordance with the UK corporate governance code.”

Financial analyst at the stockbroker Goodbody, John Cronin, said: “Benamor has been extremely vocal about the lending standards applied at Amigo since his initial departure… His concerns expressed, and actions taken have likely caught the attention of the regulator, and it remains to be seen whether the lending standards used in the period in question will stand up to scrutiny from the FCA.”

Amigo put itself up for sale in January and confirmed on Monday that it would continue to talk with potential buyers.

“Should the FCA give Amigo the all-clear on its affordability assessments through this period, this will give the lender recourse to challenge FOS [Financial Ombudsman Service] on the proportion of customer complaints being upheld,” said Cronin.

“All eyes are now focused on the upcoming general meeting convened for 17 June, with Benamor’s latest blogpost from Thursday evening implying that he will not waver in his quest to remove the board.”