Amigo Loans posts £62.6m loss in trading update

The results statement published today (26 November), also shows the guarantor lender has seen a revenue reduction of 36.5% to £92m.

The drop stems mainly from the temporary pause in all new lending except to key workers and Covid-19 related payment holidays. Amigo also saw a net loan book reduction of 33.6% to £485m in the six months to 30 September.

The results also confirm a previously announced complaints provision rise to £159.1m, from £7.5m during the previous six months. This follows a review of the volume assumptions within it’s forward-looking provision to reflect “ongoing higher levels of complaints”.

Amigo explained that monthly collections remain “robust” at 83% of pre-Covid-19 expectations. Amigo had offered 57,000 payment holidays by the end of September, with 22,000 plans still active.

Gary Jennison, chief executive of Amigo, said the lender is in a much better place operationally to manage complaints, and has now appointed advisers to explore options, including the use of a scheme of arrangement for customer redress.

As at 30 October 2020, Amigo had reviewed and reached a decision on all 25,571 complaints. Final responses were outstanding on 2,517 of those, 2,209 relate to a specific group of complaints where guarantor payment has been a feature and 238 relate to cases where more information is required from third parties to calculate redress.

Jennison added: "Where we’ve seen evidence of very poor behaviour by claims management companies, we’ve reported them to the FCA. Our focus is on ensuring that Amigo retains its position as a viable unsecured lending platform for the 10 to 12 million adults excluded from mainstream bank lending. We want to meet the varied needs of these potential customers, be that through guarantor loans or unsecured loan products."

Uncertainty

The results noted “material uncertainty”, mainly around surrounding concern of the potential economic impact of Covid-19. But this uncertainty is also over future complaint volumes and the possible outcome of the ongoing FCA investigation.

Jennison added: “It’s undoubtedly been a difficult period for Amigo but as a team we have made significant progress towards quantifying and addressing the challenges we face. We are engaging with our regulator, the FCA, on a regular basis and are actively participating in the Woolard Review.

"There are millions of people that cannot access mainstream finance today but deserve a chance to be able to access it tomorrow. We want to be part of the solution for increasing financial inclusion in the UK, that is our purpose and what we are working towards delivering in 2021."