On 29 August, Amigo published its financial results for the April-Jun 2019 quarter.
I wanted to see how Amigo was going to refer to the very high percentage of complaints against it which have been upheld by the Financial Ombudsman – see 83% of guarantor loan cases won at Financial Ombusdman – and whether Amigo is making any changes because of this.
The Amigo announcement
Here are some extracts, together with my comments.
We have recognised a provision of £2.0m relating to expected losses arising from existing customer complaints.
I think the phrase “existing customer complaints” means the £2million provision is for the complaints that are already in progress. It’s not an estimate of the cost of future complaints by existing customers.
We have seen an increase in the number found in favour of the customer by the Financial Ombudsman and have updated the way we investigate these cases.
Amigo doesn’t give the statistics on the uphold rate at FOS for Amigo complaints in the last quarter. I think investors would be interested in that number. And in how many complaints Amigo has received in the last quarter.
Amigo’s cost:income ratio has increased to 23.4% for the quarter (Q1 FY19 17.5%). This is due to the investment in our people and processes and a provision we have recognised for customer complaints.
That is a significant increase in costs in one quarter.
Responding to an evolving regulatory and economic environment, while recognising the continued strong demand for our product, we are taking the following positive action:
- New customer lending is being prioritised over relending to existing customers
- We have further enhanced and tightened our credit policy
- We are investing across key internal functions: operations, compliance and complaints.
All these moves should lead to lower numbers of unaffordable loans being given in future. Amigo notes the FCA’s concerns about repeat lending. I think all requests for top-up loans should be investigated very carefully – does the customer need more money because the first Amigo loan is causing them financial difficulty?
We have taken the decision to amend guidance for FY20 for… Net loan book growth: Broadly flat
That is a significant drop from the Annual Report guidance which said “we will now target low-teen net loan book growth.”
Are you struggling with a guarantor loan?
If a guarantor loan from Amigo or any other lender has caused you problems, here are two articles that look at how you could complain: