LONDON (ShareCast) - (Sharecast News) - Amigo abandoned its sale plans and said a surge in customer complaints meant the cost of clearing a backlog of grievances would cost at least £35m.


The chaotic guarantor lender scrapped its final dividend and said Chairman Stephan Wilcke had resigned and would leave the company earlier than expected.

Shares of Amigo fell 14.5% to 14.54p at 08:52 BST. The shares have collapsed from a high of almost £3 at the end of 2018 as a regulatory clampdown and a torrent of customer complaints have threatened the viability of subprime lenders.

Amigo said it had experienced a "significant increase" in recent weeks on top of a backlog of complaints that the regulator has told it to clear. The company said the cost of clearing the backlog could be much higher than £35m and that it would report a material increase in its provision for complaints for the year to the end of March.

The company put itself up for sale in late January and on 27 May it said it had found an unidentified potential buyer. But in Monday's trading update Amigo said the buyer had pulled out. With no other offers on the cards it has ended the sale process.

Amigo attempted to sell itself after regulators introduced tougher standards and customer complaints rose sharply. The company is the biggest provider of guarantor loans with repayments backed by the borrower's friends or family. It charges a representative interest rate of 49.9% on loans between £500 and £10,000.

The company is in conflict with its founder and majority shareholder, James Benamor, who has accused the company of committing "slow motion suicide" by allegedly continuing to lend irresponsibly while paying out refunds on past loans.

Benamor, acting through his Richmond Group company, wants to install his own choices for chief executive and chairman and sack the current board, which has said it is prepared to stand down in an orderly way. Wilcke was due to step down at the annual general meeting in July but has now resigned and will leave after a shareholder meeting on 17 June at which Richmond is seeking to oust the board.

Wilcke said: "I have chosen to resign now to make it crystal clear to everyone that the assertions made by Richmond Group about the motivations of myself and the board as clinging to our seats for our own ends are completely false."

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