FCA launches probe into subprime lender Amigo loans over fears for suitability checks

Amigo, the finance company which lends to people with poor credit histories, faced a fresh blow today when the City watchdog launched a probe into how it assesses whether its customers can afford to repay their loans.

The Financial Conduct Authority is investigating whether the subprime lender has been complying with regulations since November 2018.

Amigo sells guarantor loans to people with poor credit history whose friends or family will step in if they default.

Founder James Benamor has already accused the business of having reckless lending practices.

He has said he will not back a £100 million sale of the firm to a so-far unnamed potential buyer.

Benamor wants to remove the board, whom he has accused of “slow motion suicide” by irresponsible lending.

Amigo put itself up for sale in January.

The shares have crashed from around 290p a year ago. Today they fell 1% to 18.6p.

The company, once valued at more than £1 billion, is now worth just £88 million.

The lender’s chairman, Stephan Wilcke, said: “The board has offered to leave, and will do so, but it must be through an orderly process. We cannot risk the Amigo group’s ability either to conduct its FCA regulated activities or to continue as a London-listed company operating in accordance with the UK corporate governance code.”

John Cronin, a financial analyst at stockbroker Goodbody, said: “Benamor has been extremely vocal about the lending standards applied at Amigo since his initial departure … His concerns expressed, and actions taken have likely caught the attention of the regulator, and it remains to be seen whether the lending standards used in the period in question will stand up to scrutiny from the FCA.”