High-interest lender Amigo loses friends as its shares halve after warning of business shake-up
- Amigo was dubbed a ‘legal loan shark’ by Labour MP Stella Creasy
- It said it would shake up its business model in the face of regulatory crackdown
Amigo Holdings halved in value after warning it would shake up its business model in the face of a regulatory crackdown.
The high-interest lender, dubbed a ‘legal loan shark’ by Labour MP Stella Creasy, saw its shares crash 51.6 per cent, or 75.5p, to a record low of 70.7p, wiping £359million off its market value.
It said it was prioritising new lending over re-lending to existing customers and would tighten its credit policy.
Amigo was dubbed a ‘legal loan shark’ by Labour MP Stella Creasy
Amigo provides cash for customers who struggle to get loans from usual High Street banks, as long as they have a family member or friend who can act as a guarantor and pay the sum if they fail to.
It is already under the spotlight of the Financial Conduct Authority (FCA), which raised concerns that customers could be dragged in to borrowing more and more from the firm on interest rates of up to 50 per cent.
The changes announced yesterday, designed to ward off the FCA, will see Amigo cut its share of business that comes from repeat borrowers from 38 per cent to 20 per cent.
The firm’s chief executive, Hamish Paton, said Amigo had to be ‘prepared to make decisions that will have short-term negative consequences but position us on much firmer foundations for the future’.
The share slide came as another blow for troubled fund manager Neil Woodford, who owns 4.5 per cent of the company.
The 59-year-old’s stake alone tumbled by £16million, booking more losses for his worried investors.