Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
But the customers/complainants are legally creditors who take precedent over ordinary shareholders. Given that liabilities are significantly in excess of assets, or even the present value of the cash flow of the assets, you'd expect shareholders to be wiped out in such a situation. Sure it's not what shareholders would see as being in their interest, but it's how it works. The pain isn't meant to be shared between groups, it's prioiritised.
I am aware. But after I pointed out the potential pitfalls in plans/opinions that seemed good from afar, people seemed to be claiming that it was (potentially) management's plan.
So, to be clear, it's not the managements plan, its yours? Or you think it really is their double secret plan?
Except that its not talked about as a way out of UK (into overseas) lending (as it relies on FCA approval), nor as a way of getting out of the SOA obligations. It's a hedge against getting SOA approval, executing it, but the FCA still not being willing to regrant lending approvals to Amigo Loans, but being willing to do it to a second entity.
"Honey, come look! I've found a solution that two sets of management teams, and all the other companies in the sector and their expert advisors and lawyers have missed."
If they are settled they don't go to FOS at all.
The published 71% is a FOS uphold rate, not a Morse rate. Complaints only reach FOS after they've already been rejected by Morse.
His departure was announced a month ago.
FWIW, the announcement of stopping lending conveniently coincided with coronavirus, to further complicate things.
The FCA introduced a load of overdraft measuresin CP18/43 in that vein at the back end of 2019. First of these was to eliminate fees, so that everything had to go into the APR, and second that unauthorised charges had to be the same as authorised. There were also some other measures that were postponed due to Coronavirus, but are now being implemented. In particular, if you are constanty in overdraft (ie recurring debt), it is seen as a potential sign of financial difficulty, in which case they they are meant to work with you to reduce it. They also reserved the right to put a price cap in place later down the line.
Whether MCL would able ring fence complaints in one entity will depend on how they've structured the business, and what FCA permissions they have in various parts of the business. Provident had multiple active divisions with permissions, so could shut down the doorstep lending part but carry on lending elsewhere. MCL also has DotDot Loans, so might be able to do something similar. It's likely to be harder for Amigo being a monoline company.
Interesting. I'm not sure how that's legal.Total interest payable is meant to be capped at 100% of loan value for loans under 12 months in length.
That would have depended on what the fee was and what average balance they assumed while modelling it. Anything with a membership fee has high apparent APR under today's calculation methods.
Yeah, but the Amex APR rate has to account for the annual fee, which requires various assumptions over spend levels, credit limits and repayment behaviour. So the card on which they give a 100% "APR" has an annual fee of £250, as well as a the intererest on purchases. As they seem to assume a relatively low credit limit of £1200, the costs of the interest + fees on that makes the APR look silly. From what can see the typical "real" interest rate is 24.5% (simple?), which would be an APR of about 28%, which is expensive enough, but remember that Amex's model is really aimed at the someone with a big credit limit, and a bunch of business expenses that gets paid off each month.
It was a FOS, not FCA issue. And one of interpretation, rather than back-dating of regulations. More specifically that FOS began arguing that what had previously been seen as indicators of *credit* risk (eg arrears, use of HCSTC, high debt utilisation), were also indicators of *affordability* risk. And also that the nature of guarantor lending (long term, so high absolute level of interest to repaid; and involvement of a third-party), meant that applications should get a high level of scrutiny. As pretty much everyone who applied for a Guarantor loan would have some credit risk indicators on their file, this this meant that they felt that pretty much everyone should have had a detailed affordability check, eg going through bank statements. which was rarely done. As I understand it, where real legal people have looked at this properly, they've concluded that despite this being potentially inconsistent/unfair, given the broad discretion that FOS is given to make decisions, it did not reach the very high/narrow bar requred for a successful JR, particularly given precedent set during failures of previous JRs against FOS.
There's a reason no one's gone down the JR route. It's that no one credible with good legal advice thinks they can win.
That's pretty much the whole sector gone. NSF( George Banco, Trust Two), TFS, UK Credit, Buddy all gone. Bamboo no longer offering Guarantor loans.
The "dilution is irrelevant if you take up your rights" is a bit of a red herring. The point is you'll have to pony up 19x+ the value of your stake. It's a bit like crashing your car, being left with just the steering wheel, but then claiming the crash was irrelvant as long as you pay the money to fix the rest of it.
Sounds simple eh... why don't you go for it.
If you're going to lend out £35m, you need to have the assets in the first place. Lending doesn't magically create assets, it converts from one type of asset (cash), into another (debtors).
Yeah, what this board needs is only people going "wouldn't want to out of this over the weekend", "£1 here we come", "don't worry, a 95% drop in value is a great opportunity to average down"