Email17 Jun 2020 12:12
i'm writing an email to Amigo regarding the critical claims issue, some guidance please? here's what i have drafted:
Dear Kate,
Hope you are well.
I have some questions on behalf of myself and a number of other shareholders regarding the current situation Amigo is facing with regards to rising claims numbers, supported by the FCA.
On 27th November & 28th November 2019 the following updates were given via RNS:
• Half year report - Received FCA feedback on Guarantor Lending
• Regulatory Update - Hamish Paton, CEO of Amigo, said:
"We are grateful for the significant amount of time and effort that the FCA has committed to the Review and we take on board all of the improvements they have identified. These will be good for customers and other stakeholders, and further reinforce our strategy of doing the right thing for all our borrowers and guarantors."
At this point the impression given to the market was that all lending was now being conducted in a manner that was satisfactory to the FCA, and in the 3rd quarter results on 27th February 2020 lending had continued, but claims provisions were increased to cover the period to 31/12/2019 (without any disclosure of the actual number of claims).
Shortly after this on 4th March 2020, James Benamor resigned from the board and claimed that Amigo was still lending in violation of the previous findings, this was refuted by the board on 5th March 2020 stating:
“The Company monitors its loan book regularly and has concluded, as part of its Q3 review process, that it does not have a systemic problem. In the Company's Q3 results, it announced a £18.7m provision. This provision relates to both the estimated costs of customer complaints received up to 31 December 2019 and the projected costs of potential future complaints on certain higher risk historic loans.
Most worrying however is that on 8th June 2020 Amigo announced that it had seen a further significant increase in claims and that it was expected that “clearing the backlog of complaints covered by the Voluntary Requirement will be at least £35 million and could be materially higher.” This indicates that Amigo is continuing to pay out on these claims despite the fact that all lending should have been done according to the improvements suggested by the FCA. If this is the case then this surely effects the going concern of the business and this should have been made clearer to shareholders.
Could you please therefore confirm:
1. What period of lending do the claims received up until today relate to?
2. How many claims have been processed in total and what % have been paid out on?
3. Is current/future lending expected to be within the guidelines set out by the FCA i.e. in your opinion what is the likely risk that this lending will be subjected to claims?
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