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Amigo says it's not an enemy; CITYDESK For live business news visit Guarantor lender backs probe as its profits soar.

BRITAIN'S biggest provider of guarantor loans has defended their use, after posting a near 70 per cent surge in profits.

Amigo said it backed a probe into the wider market by the Financial Conduct Authority. The City watchdog has stepped in after estimating that guarantor loan balances have more than doubled since 2016 to almost PS1billion.

Bournemouth-based Amigo has an overwhelming 88 per cent share of the market.

in part of has offer for and It is merger firms It was started in 2005 by entrepreneur James Benamor, whose wealth is estimated at PS800million, but who has now stepped 88% down from the board. Guarantor loans, typically of up to PS10,000, are often aimed at borrowers with a poor credit rating, with family or friends on the hook if repayments are missed. But it comes at a price, with Amigo charging an annual interest rate of just under 50 per cent.

Amigo's sub-prime loans market Debt charity StepChange said that it had 22,281 clients with guarantor loans last year, up 35 per cent from 2017.

Amigo said yesterday it "has always gone to significant lengths to obtain the informed consent of every customer".

It came as Amigo announced its loan book jumped by more than 17 per cent to PS707m in the year to the end of March, with customer numbers soaring 23 per cent to 224,000, and profits rocketing 68 per cent to PS111m.

share of the guarantor But impairments - loans where payments have been missed and which it doesn't necessarily expect to get back in full - stood at 23.1 per cent of revenues. Amigo said 95 per cent of loans were up to date or less than 31 days in arrears. But 10 per cent of repayments are made by a guarantor.

Stephan Wilcke, company chairman, said: "Amigo exists to help provide financial borrowers excluded by mainstream lenders."

Chief executive Glen Crawford is leaving this summer due to ill health and will be replaced by Hamish Paton, boss of rent-to-own firm BrightHouse.

CAPTION(S):

Amigo's share of the sub-prime guarantor loans market

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Publication:Daily Record (Glasgow, Scotland)
Date:May 29, 2019
Words:348
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