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I think the number will be high due to no win no fee sharks chasing it, but overall less than some forecast, the affordability process seems pretty clear and the FCA has “thoroughly reviewed” it, no system is perfect and you can’t always catch white lies From people or from their applications. But we will have to wait and see in time.
https://www.amigoplc.com/investors/investor-faqs
“ We have confidence in our affordability processes which have been thoroughly reviewed during the Financial Conduct Authority authorisation process and are supplemented by regular internal reviews.
It’s not in Amigo’s interest to give out loans to individuals who are unable to repay them and our affordability processes go above and beyond standard industry practice by asking for a detailed line by line breakdown of expenses from both the borrower and the guarantor. Amigo Loans charges no additional fees or costs, including to customers in arrears, and already caps the total interest a customer will pay.
Customers must be able to demonstrate they can meet all their commitments, rent, bills, food, clothes etc. and any other credit commitments, as well as their payments to Amigo Loans, and still be left with an £100 buffer.
We then undertake extra levels of questioning where needed to help us make a more informed decision about affordability. We speak to all guarantors over the phone to ensure they are aware of their responsibilities.
We currently lend to approximately 15% of people who start the loan application with us and over 90% of loan repayments are from borrowers, as opposed to guarantors. This demonstrates the effectiveness of our affordability processes.”
yes it has thousands of complaints , but obviously not every one of them is going to be upheld ..if theres a chance of anyone claiming interest back , they’re obviously going to try , especially on a no win no fee basis ... BUT my guess is less than 20% will be upheld . I know loads of people who tried their luck at the ppi no win no fee scheme ... some got something back , most got nothing .
All very interesting comments so thx for the input its appreciated. It won t be in anyones interests for Amigo to fall but that doesn t mean it wont. The danger as we know is like PPI the claims.just keep coming and they never get on top of it or past it. The Operational costs for no actual value add in topline must also go up substantially. We must also consider that there is going to be a likely dip on the markets and sentiment at a macro level may also be a negative if this correction comes soon. My gut instinct is that they will survive at a heavy price and writing up profitable business will be rather harder so the recovery may be less dramatic. Let,s see!
Have to disagree with your comments on this going to Judicial review. Even as eccentric as JB is, after deliberating this issue, even he is would be wise enough not to challenge the FCA or FOS imho.
There could be an opportunity to turn this around but all depends on how fast they can get a grip on the irresponsible lending complaints and look to enhance their affordability processes by working with the FCA, not by confronting them.
0% 5% 10% 49% 1000% the interest rates don’t matter.
For example
Say someone earns £1,600 a month after tax
has £2,000 on a payday loan at 1000%, £5,000 credit On credit cards At 29%, £10,000 on a loan At 5%, £2,000 overdraft At 30-50% all which cost them say £600/700 a month, It’s been perfectly affordable for them and they have repaid Monthly for 3 years With no problems, It hasn’t been easy because they have £700 rent plus kids, car costs etc so they are left with very little or negative at the end of the month, credit card don’t get repaid in full at end of month, Constantly in the over draft etc.
They realise the interest is stopping them clearing it and they are getting no where so they go to get a consolidation loan at 0% which costs them Overall £100 less a month but offers an eventual exit From the financial hole that they are in.
Well it turns out the provider of that consolidation loan even at 0% is at fault as far as affordability goes Because of the persons other outgoings, even if you help people out and reduce their monthly outgoings you are at fault.
This is the same reason why people With £xxx k in equity in their properties get rejected for mortgages When they want to consolidate all their other debts to the mortgage and overall lower their monthly outgoings,
The system is broken, but it’s broken for every lender even at 0% - 1600%.
My opinion, Glen Crawford will be the man to get this company back on track. He will go after FCA regarding moving the goal posts. FCA backed Amigo Loans lending model before the company floated. Hamish Paton did nothing to defend Amigo loans during his tenure and rolled over to FCA constantly changing its directives on affordability. Glen will get these issues resolved and box off this relentless build up of dodgy manipulated claims that FCA have been supporting. This IMHO will go to a judicial review which Amigo will when. JB wanted the board to fight FCA but they did not have a backbone. Glen will be the man to get this company back on track. I also believe JB will have a continued involvement once the other muppets have departed the board. I expect JB to retain 25-30%. All IMHO. DYOR.
Dont worry yourself Faz. They have plenty of cash to cover the complaints even if they are upheld which as others have suggested is unlikely due to the larger implications to the financial market. amgo is nothing like wonga- you can't compare 49% Apr to the 1600% that wonga charged. 49% is much closer to credit card APR so the FCA won't be too harsh or else all the major banks will be suffering also . As I have mentioned before, the dumping of JBs holding at these prices are just being hoovered up by anyone and everyone.
What do people feel are the main risks associated to this share?
For me, the number 1 problem has to be the level of complaints that are building up against Amigo! 9k in the backlog and volumes increasing on the a daily basis. Given the fact that this is at the forefront of media attention, will no doubt generate a high level of interest from CMC’s who will just bombard Amigo with a constant stream of cases for a long time ahead.
Now let’s look at similar companies in the high cost short term credit market like Wonga, Sunny, Wageday Advance etc who have all gone out of business because they didn’t appreciate the detriment of complaints can have against their businesses. JB doesn’t do any favours for the company by challenging the FCA or FOS as their stance with irresponsible lending is very clear and will hold companies to account that have not conducted their practices in line with their expectations.
Secondly, it will be interesting to see how and if the number of shares dumped by JB will constantly be bought for the remaining amount of time. It’s a huge volume being dumped each day for retail to soak up and time will tell if this can continue. DYOR and GLA