The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Read my posts from when the 95% dilution was announced. I was and am strongly against such a heavy dilution. I’ve argued that customers and shareholders should share pain equally. Scheme 1 was 90% haircut for creditors with no haircut for shareholders - I said that was both unfair and not in shareholders interests. Scheme 2 is 95% haircut for shareholders, 58% haircut for creditors. I think the 95% haircut for shareholders is lazy and I’ve clearly said Amigo has overstated the extent to which the court expects a shareholder wipeout.
The Jimmy/Sarah thing is an easy way to dismiss what I write but is also lazy (and really boring!) So, to be clear, I have zero connection to or involvement with Debt Camel. I do not know, and have never met or spoken to Sarah.
Soundsrisky, if you look at my posts, I’ve been clear Scheme 2 is a travesty for shareholders and something I think may not pass a shareholder vote.
I thought Scheme 1 was a travesty for customers because it left shareholders untouched. I said at the time Scheme 1 was not in the interests of shareholders because it made it much more likely that the FCA would object.
So Gary has gone from asking shareholders to take no pain to asking them to take a 95% wipeout. There was always a middle ground, but I fear Gary is too blunt a weapon to have seen it.
There’s clearly a risk that neither extreme will succeed. But at least Gary will have made a million quid trying.
BeBold, if you’re saying Gary has knowingly published two RNS statements setting out 19:1 dilution when he has no intention of implementing it, why would you want to be invested here?
Are you of the view that lying is OK as long as it’s in shareholders’ interests?
Who knows for certain what the FCA will do. But it would be a brave shareholder who bet on FCA (who opposed Scheme 1) allowing Amigo Holdings to generate value for undiluted shareholders via Vanir if Amigo Loans has closed down without paying creditors.
When have I ever claimed the sector is dead? I have claimed the sector has got things badly wrong and that firms needs to put things right if they want to carry on trading. I’ve never said it’s dead or should be dead, only that it needs to do things differently.
Itisagame, there is no profit. Amigo might be generating cash by collecting more from the loan book than its costing to run (for now). But, for more than a year, it has been protected by the FCA’s moratorium from meeting enormous compensation costs. If that moratorium were lifted, we’d see how much profit there really is. It would be game over.
Manu - still not sure of your point. I wasn’t drawing any comparisons between Amigo and Morses. I was making the point that Morses is losing a lot of cases at the FOS so I wouldn’t be so sure that their lending is watertight. If I was a CMC, the high FOS uphold rate would make me think that Morses is a good target (and I guess CMC cases are more likely to go to FOS if not paid out by Morses).
And Paul Smith’s behaviour leaves another bad smell hanging over MCL.
Manu, not sure why that’s relevant?
Clintek / Robism, your faith in MCL’s lending is sweet. But they’re losing 71% of cases at FOS:
https://www.financial-ombudsman.org.uk/files/312969/Business-complaints-data-H1-2021.xlsx
Paul Smith is all over the business pages today. His behaviour has done MCL a great disservice.
Whilst the outrage about retrospective rule changes continues, nobody has been able to point to any actual rule changes since 2015 (which Amigo says it was already complying with). If you’re going to talk about rule changes, please specifically tell us which new rules were introduced and when.
Robespierree has written that FOS have interpreted and applied the rules in a strict way but that is different to new rules being applied retrospectively.
Mikesm, whilst you didn’t specifically mention violence, it is generally accepted that violence and threatening behaviour are part of the standard loan shark practices. And you did mention loan sharks.
Of course I have never said that someone who needs a washing machine or a car repair shouldn’t be given credit. But the credit should be affordable. Clearly, if someone doesn’t have £300 to buy a washing machine, they’re operating on a very tight budget and it’s a regulatory requirement to check that they can repay what they borrow.
Of course, Amigo doesn’t really operate in the new washing machine / car repair territory. It offers loans in the thousands, not the hundreds of pounds . A £10k Amigo loan over 5 years will cost you the price of a very nice new washing machine (£400) every single month for five years, at a total cost of £24,000.
I agree with you 100% that people will seek credit for things they need. The purpose of regulation is to ensure that lenders prevent credit being provided to people who can’t afford the credit they seek.
Once credit is better targeted only at those who can afford it, there would be no need to charge such high levels of interest.
Of course I would want regulated lenders to be source of credit for everyone who needs it. But the crucial sentence in your post is “fully in accordance with FCA regulations”. That’s where Amigo has fallen short - and admits it has fallen short.
Itisagame, you don’t need to take my word for it.
Read Amigo’s RNS announcements, e.g. 27 May 2020, 28 August 2020, 3 November 2020. Even the scheme RNS in December 2020 says Amigo will return to lending in early 2021 with no proviso that this required FCA approval.
So yes, please do give Gary a call. If you’re covering all the other things Gary has got wrong, it’s going to be a very long conversation!
Itisagame- when you suggest the FCA has favoured Provident by not opposing their scheme in court, are you aware that Provident Personal Credit sought a scheme that involved the voluntary payment of £50m from the parent company for creditors, and a shut down of the business, including writing off and not collecting the remaining loan book as at late 2021.
If you want FCA to treat Amigo on the same basis, and attach the same requirements to their scheme, I’m not sure many shareholders will thank you.
Mikesm - when you contrast increasing demand for credit with shrinking number of providers, are you suggesting that all demand for credit should be met? Many applications for credit will be made by people who cannot afford the loans they are seeking. The right outcome in those cases is to decline the application.
The fact that there exists a group of people who would otherwise lend money illegally and secure repayment violently is not justification for Amigo’s continued existence. “At least we won’t break your legs if you can’t repay” is not the benchmark Amigo should be aiming for.
Mikesm- “Amigo is a mid-cost lender, as categorised by FCA”.
Not correct. All guarantor lenders are categorised by FCA as high cost lending. For example, see the following letter to firms in FCA’s high cost lending portfolio, which includes guarantor loan firms:
https://www.fca.org.uk/publication/correspondence/portfolio-letter-firms-high-cost-lending.pdf
Or this page, summarising high cost credit products:
https://www.fca.org.uk/firms/high-cost-credit-consumer-credit