Crackdown: Amigo Loans lends cash to customers with a poor credit record at 49.9 per cent interest
Shares in high-interest loan firm Amigo fell 3.9 per centafter the City watchdog launched an industry-wide crackdown.
The company lends cash to customers with a poor credit record at 49.9 per cent interest.
It uses a guarantor model where, if the borrower is unable to pay, then a friend or family member steps in to take on the debt.
But the Financial Conduct Authority (FCA) warned guarantors across the industry are increasingly forced to make repayments. It is now investigating the market to understand how well-informed guarantors are.
Amigo raked in a profit of £79million in the last nine months of 2018, and had a £770million loan book at the end of the year.
A total of £102.8million of these loans were overdue, according to published accounts, up 64 per cent on 12 months earlier.
Around £65.6million of loans were overdue by less than a month, and Amigo says this figure was pushed higher because the last day of the year was a Sunday.
It gives borrowers seven days’ grace when they go overdue before chasing them for the money.
Amigo said: ‘We support the FCA’s work and hope it goes some way to ensuring other guarantor lenders follow suit and adopt Amigo’s robust standards.’