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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...
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...
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.
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...
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...
Fair enough. Will leave you alone now??
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.
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.
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..
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.