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Hi Gabriel.
I take him at his word too. I believe he means it and I also believe that current processes will be solid. After what's gone on over the last 18 months or so, Amigo's affordability checks must be very solid. I'm just not sure how much comfort it provides for historic lending. And I think these more rigorous affordability checks now in place might - especially in post-furlough times - mean that we don't lend as widely as we once did. Personally, I think that's a good thing, even if it means Amigo won't ever get back to the size it once was.
I think that you're suggesting two guarantors are only liable for their half of the loan. Agree that might make it more attractive to the guarantor, but it leaves Amigo more exposed because if one of the guarantors fails to make their portion of the repayments, the other guarantor can't be asked to step in and cover. Swings and roundabouts maybe... but worth a try to see how it works.
Jimmyg56
Hi
I absolutely agree Amigo's obligation to make sure that the borrower can pay is Paramount and I was reassured by Gary Jennison statement one this:
"We do absolutely everything properly, I am convinced that anybody who says we don't do proper affordability, Is saying that because they don't know what we do and how we do it"
Whilst I understand this is a recent development and effective immediately, I do find myself taking him at his word.
Its was my understanding that the main issue causing the complaints were 2nd loans or "Top up loans where additional Credit referencing of the Borrower and Guarantor.
I think this is why the template forms on these CMC's like those included on the "moneysaving expert" site all directly mention the top up loans.
https://www.moneysavingexpert.com/reclaim/reclaim-guarantor-loans/
Moving forward, I suspect the "Top Up" loans will not be an issue due to revised operational procedures, once "Bitten Twice Shy"!
Also I suspect for some time now there will be no more top up loans! (Thoughts?)
Whereas the mainstream lending could be given an extra layer of protection by offering the New Customers from here on in, the "Option" of a 2nd guarantor.
Just to ensure Prudent Lending wherever possible due to the Potential Economic consequences of the current Financial Climate.
It would make sense to me to acknowledge the Guarantor's pivotal role in all this as in the worst case scenarios in the future it would make sense to consider them and offer them an opportunity to mitigate their risk.
For many guarantor's, I can imagine the difference between covering £5000 and £10000 is Huge.
This is a well established practice in the property rental business where each guarantor' becomes responsible for 50%.
Just trying to see this from all sides..
Also a second guarantor does not lessen Amigo's obligation to make sure that the borrower can afford the payments in their own right. But it might give some extra safeguard in case of a default if borrower's circumstances change after lending.
Franky, it may well be true that a lot of people will need help when furlough ends. But borrowers needing a loan is one thing - they have to have the ability to repay too. We can't pretend that the next few months won't pose a lot of questions on that side.
Second guarantors could be a good idea but it raises lots of follow on questions. Would guarantors be jointly / severally liable? So is each guarantor only responsible for their share of the repayment or are they jointly responsible for the full amount? How easy would it be for borrowers to find two people who'd be prepared to stand behind their loan? I think a lot of people find it difficult to approach one guarantor so it could be a barrier to someone even applying.
I've seen Gary's video and it was good to see him so bullish about Amigo's checks. But, if he's right, why is there an FCA investigation AND such high FOS uphold rates? Maybe Gary is talking about today's processes rather than how checks have been done in the past - but it's the historic stuff which is driving complaints. Even Amigo's assumptions are based on upholding 40% of complaints received. OK, that's a lot lower than the 87% at FOS, but it's still recognition that the firm knows there are significant issues. I think that's why there hasn't been a JR against FCA / FOS so far and why GJ puts a lot of emphasis on his ability to work well with regulators, which is the right approach in my opinion.
If Gary is right, then there's absolutely no reason why we shouldn't be restarting lending today. But if processes need a bit more work, then I'd rather Amigo take a bit longer before restarting lending in order to get it right.
Fair enough. Will leave you alone now??
Tdaves
It is my understanding that in order to close that loophole, from a recent statement by Amigo Holdings that the improved standards and practices and affordability checks have been addressed and are currently active with the "Key Worker" loans, in preparation for mainstream lending & in accordance with the FCA.
An optional 2nd guarantor would appear to offer an easy and effective way to offer Prudent mainstream lending given the current Financial Climate.
Plus in the worse case scenario it takes off 50% of the pressure off the guarantor, lest we forget their pivotal role in this company...
Gabriel, I might be missing your point but that's why I think that the 2nd guarantor won't save the day. I mean if the one who takes a loan need to resort to a guarantor he will run to FOS and make a claim and Amigo pays for all this again...
Maybe setting up a charity would be the better approach, directors will have no problem Drawing 7 figure salaries then and the “customer” can choose if they want to pay it back.
What we Have is fine as it is, just need more new customers who pay their bills.
itisagame
A 2nd guarantor is commonplace in the Property Rentals industry.
Even a private landlord can obtain a 2 X full credit checks on a couple applying to rent a property for around £10 in under 24hrs.
I imagine Amigo Holdings could expedite this timeframe and with volume credit checks would only pay a fraction of what private landlords are charged.
Also the operational procedures are already there.
All they would need to do is add a 2nd guarantor which could potentially save them (And us Investors) Millions.
This is a tried and tested method with default payment matrixes already established in the Property sector as a guide.
Its why landlords run these checks...
Hi Gabriel, yes i did watch it. That's why I said "I am not saying Amigo hasn't been doing proper checks". While I like his statement very much and I believe that Amigo will do well and very soon, otherwise i wouldn't be here. Still if they have been doing everything properly why/what is taking so long to prove it to FCA and stop those leeches FOS...
Morning all,just an idea what about a guarantor incentive scheme ? Just a thought?
Tdaves
Hi.
I don't know if you have managed to see the recent interview with Gary Jennison.
Hey states for the record:
"We do absolutely everything properly, I am convinced that anybody who says we don't do proper affordability, Is saying that because they don't know what we do and how we do it"
https://www.youtube.com/watch?v=ANalZ4nEVjc&feature=emb_logo
The 2nd guarantor could be an option to vastly improve Prudent lending.
Although I appreciate your personal experience with a guarantor, however I suspect the vast majority of people will find it easier to find 2 guarantor's willing to mitigate their risk by 50%!
2nd Guarantor ?
Having enough problems with one, Might as well go down the crowd funding route. Or go whole hog and set up an options trading facility for each individual loan.
Truth be told I don't think a second guarantor would be safer for the company, I mean the problem is with affordability checks/claims. Also I think for many people who need a loan it's not easy to find even one guarantor not to mention two... I once took a guarantor loan with a guarantor whose credit history was way worse than mine. Didn't have any other options so entered my girlfriend just to try it. I can only assume no one was bothered to check. So personally I don't think additional guarantor is a good idea. You need to properly check if the person taking a loan can afford it (not saying Amigo hasn't been doing it). And need some flexibility (proper rules) on FCA side so people don't abuse the option to claim as now every Tom and Jack is claiming for whatever reason comes to their mind. Just IMO.
Guys FYI, i wrote to CFO yesterday for a friend who needs a loan desperately - Not had a reply as yet.
seamus --- If there is a vaccine next spring, hopefully i will fly !!! ;-)
Twisty
I know there are many MANY industries that are struggling, but I'm afraid I doubt Amigo will offer loans to those on schemes
GJ did say something along the lines of lending but in a limited way. Gabriel will be able to fill this in
I personally think we will lend again to the other millions that are in more secure jobs like construction, plumbers, decorators, plasterers etc this will be enough to lift us nicely
Spring next year after Vaccine we should fly
TwistyMinkle
Re: Optional 2nd Guarantor Concept
I would not be so forthright to contact them directly as I have no prior relationship with the board.
I do recall that others have been in email contact with them & quite happy if any of you could at least put forward the suggestion?
After all, our hard earned cash is involved and anything that can secure Prudent Lending will certainly secure our investment, guarantee over 400 people keep their jobs & so many more people have access to finance that otherwise might not be available to them.
I am not solely interested in personal gain, this has the potential to help everyone.
Frank .... It is almost certain we will get news next week of whether we have managed to hit the FCA target of 8 weeks with new claims as the deadline i believe is 31st Oct ( happy to be corrected ) but as the 31st is a Saturday, that may come beginning of following week. I hope there is some negotiation with the FCA and FOS regards to new claims which appear to fraudulent and a satisfactory outcome can be reached to get us moving forward. On my personal opinion, some good news to move the SP back up a couple of pence would be welcome, a single figure SP makes people more nervous as has less room to manoeuvre if there is any bad news.
Gabriel - I have discussed this 2nd guarantor point privately with a couple of people on here and we all agree that this is a splendid idea. I'm not sure that any of the Board look at LSE but it's well worth firing off an email.
FrankyS1971
Absolutely.
Prudent lending is Paramount.
I could not agree more on moving forward with increased security.
I really hope they consider taking a 2nd guarantor to solve this issue...
Yes you would have to run 2 credit checks on the guarantors costing a few quid each but this solves many issues:
1. If the loanee defaults they have 2 people from separate addresses meeting with them to address financial concerns.
2. If the loanee absolutely can not pay due to a change in circumstances it will be agreed between those 3 parties.
3. Should the guarantor's be left with the debt they only have 50% each as a burden.
I think this one simple mechanism that has been used by property landlords with a lending system validated and stress tested .
I suspect any default outcome matrixes could prove that this simple extra layer could save the company Millions.
Ps. If Amigo Board is watching I would appreciate any recognition or PM for my ideas. You said you want to interact more! lol
MriGoat - end-to-end process from application from application to money in guarantors account is 24-78 hours depending on how fast the guarantor fills out their end. Was an Amigo customer many years ago and now a holder here.
Thanks and NP Franky :)
TwistyMinkle
For what its worth
In my experience of Corporate Operations.
A Baptism Of Fire for 405 staff members is not a good idea.
A chaotic period on the 3 weeks before Christmas ought to be achieved with the employees in mind.
Christmas items are already appearing in the shops.
The momentum is already building...
Goaty! (eveyone get an 'y' ending on their handle today:-))>...I reckon the process is still rapid. 3-5 days.