Amigo Loans loses customers and revenue but optimistic of return to lending
The business stopped lending in November 2020 amid high-profile mis-selling claims but said it plans to restart by late February.
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Your support makes all the difference.Amigo Loans has seen its customer base halved and its revenue cut by two-thirds as the troubled lender stays afloat despite its nearly two-year lending “pause”.
The company stopped lending in November 2020 and has struggled to resume business amid high-profile mis-selling claims but said it plans to restart lending by late February.
But Amigo saw customer numbers almost halve to 61,000 in the three months to June 30, from 118,000 in the same period last year, according to its financial results published on Thursday.
Revenue also dropped year on year from £32.5 million to £10.4 million in the latest quarter, which Amigo said was driven by a reduction in its loan book.
The company said it has been working with the Financial Conduct Authority (FCA) to gain regulatory approval for its new lending platform, RewardRate.
This is the next step in our recovery, ahead of a proposed capital raise, and would enable a new start for the business, having taken on board the learnings from the past
Chief executive Gary Jennison said the new brand “aims to offer a more affordable, responsible and flexible option to underserved customers who currently have very few choices”.
Amigo spent around a year fighting for survival in the courts after a swathe of customer complaints from borrowers who were mis-sold high-interest loans that they could not afford to repay.
But in May, customers voted in favour of a compensation package that would allow it to keep trading. The scheme was approved by the High Court.
Mr Jennison said: “We continue to engage positively with the FCA around our return to lending.
“This is the next step in our recovery, ahead of a proposed capital raise, and would enable a new start for the business, having taken on board the learnings from the past.”
The money would be used to fund the minimum £15 million contribution to the compensation scheme and to support future lending, Amigo said.
Bosses added that it is likely to need approval from shareholders and that it must be completed by late May in order for the company to continue lending.
A report from auditors PwC, which supervises the compensation scheme, will be published in early September.