City watchdog to monitor Amigo's payments to directors and shareholders

Amigo Loans has been barred from paying dividends or transferring funds out of the company unless it gets permission from the City regulator.

The embattled subprime lender said it had entered into an "asset voluntary requirement" with the Financial Conduct Authority (FCA) meaning any discretionary cash bonuses for directors will also require the watchdog’s approval.

The restrictions do not stem directly from the FCA’s ongoing investigation into Amigo’s customer creditworthiness checks and are a “normal tool” where a company has flagged material uncertainty over its ability to continue as a going concern, analysts at Goodbody said.

In July, Amigo plunged to a £38m annual loss and warned over its ability to continue as a going concern after penciling in a £127m charge for dealing with the cost of customer complaints.

Shares plunged a further 20pc to 8.4p, valuing the company below £40m but regained some ground on Monday afternoon.

The Bournemouth-based firm was valued at £1.3bn when it floated its shares on the London Stock Exchange in 2018 but has since faced a host of governance and regulatory challenges.

The company insisted it had sufficient liquidity to continue its operations and said that the voluntary requirement did not affect the day-to-day running of Amigo or its ability to pay down debt.

It added: “The board continues to be focused on addressing Amigo's legacy issues, restoring confidence in its corporate governance and building a sustainable business for the long term."

Amigo provides up to £10,000 to borrowers with poor credit ratings at an interest rate of 49.9pc if they can find a family member or friend to guarantee repayments.

Incoming chief executive Glen Crawford announced in September that he had quit the company before even taking up the role due to a "divergence of views with the majority of the board".

Shareholders narrowly rejected an attempt by founder James Benamor last month to force a return to its board and oust key personnel. Amigo has appointed Gary Jennison, a veteran of three company turnarounds, as its new chief executive.

The result ended Mr Benamor’s second attempt this year to overthrow the existing management and reclaim control of the ailing lender. He believes Amigo failed to oppose or adapt to tougher regulation.

The pandemic has also forced Amigo to give payment holidays to 47,000 customers, and the firm decided to halt new lending except for key workers.