Amigo tops financial complaints chart as guarantor loan cases soar

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Amigo Holdings PLC (LON:AMGO) has become the UK’s most complained about financial firm according to new data from Financial Ombudsman Services, which has seen a surge in cases about guarantor loans.


Bournemouth-based Amigo specialises in this type of product where a family or friend underwrites loans for people who otherwise might struggle to borrow money.


According to the ombudsman, there were 10,321 complaints about guarantor loans between October and December 2020 compared with just 303 in the same period in 2019.


While this covered several providers, Amigo is the largest supplier of these type of loans and received the most complaints.


In the second six months of 2020, Amigo received 12,854 complaints or an increase of more than 3,000% from the second half of 2019.


It is the first time in 13 years that Payment Protection Insurance (PPI) did not receive the most complaints, the Ombudsman service said.


Amigo’s problems and its attempts to deal with them have been well-publicised, which has led to its loan book shrinking, lower revenues and a loss before tax of GBP81.3mln in the nine months to end December 2020.


To help resolve the situation, Amigo has proposed a Scheme of Arrangement process to give it certainty on the final complaints liability for all complaints on loans issued to date.


“If the scheme does not proceed, the high level of complaints could mean that Amigo becomes insolvent,” it said.


“We have faced very serious challenges from the high level of complaints received about our historical lending, a significant number driven by claims management companies which have included many invalid claims.”


Shares fell 6% to 15.8p.

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