FCA orders Amigo Loans not to pay dividends or directors without its permission

The chaos at guarantor lender Amigo took a further twist today as the Financial Conduct Authority ordered that its new board could not transfer any money out of the company without the regulator's prior permission.

Amigo has been in turmoil with new chief executive Glen Crawford last month pulling out of the role he took on in July amid a power struggle between the board and founder James Benamor over control of the business.

Regulators have been investigating the firm and its share price has collapsed.

The group said it had entered into an "asset voluntary requirement" or "VReq" with the FCA which means payments to directors or dividends to shareholders must first be approved by the City watchdog.

The FCA launched a probe into the lender in May over whether it had been assessing clients' creditworthiness properly, and into whether its governance was in breach of regulatory rules.

Its guidelines state it can use VReq powers "where we suspect serious misconduct may have occurred and harm needs to be prevented immediately."

FCA investigators are looking at the company's behaviour since November 2018 when new consumer protections were brought in to ensure companies do not lend to people who cannot afford the repayments.

Guarantor lenders offer loans to people with poor credit records, getting the borrowers' friends or family to promise to make the repayments if the borrower cannot afford them.

Spiralling numbers of people have found themselves unable to service their guarantor debts, according to the Citizens Advice Bureau and debt charity StepChange. The FCA has been worried about the large numbers of guarantors having to step in and repay debts.

Amigo today moved to reassure investors and customers by saying: "Amigo has adequate liquidity to continue to fund operations and support its customers.

"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."

Read more

The 25 best shares and funds to invest in the new Covid-19 lockdown

Six shares and funds to buy to profit from the online shopping boom

The best 20 shares and funds to buy in a recession

Amigo says revenues tumbled by a third during the Covid-19 crisis

Amigo urges founder not to waste time on shake-up proposals

Amigo Loans handed lifeline by its lenders until Christmas

Amigo given more time for complaints backlog

Amigo Loans in further hot water with FCA as complaints spiral