LONDON (ShareCast) - (Sharecast News) - Lender Amigo swung to a full year loss after a massive increase in customer complaints.
The company on Monday said the cost of complaints jumped to £126.8m in the year to March 30, compared to just £100,000 a year earlier.

As a result, Amigo swung to a pre-tax loss of £37.9m from an £111m profit in 2019.

It also warned it was facing a "material uncertainty surrounding going concern" because of "the economic impact of Covid-19, a potential increase in the level of complaints received and the possible outcome" of an investigation by the Financial Conduct Authority.

"If complaints redress were to continue at the same high levels assumed in the downside scenario beyond the next 12 months, the group would need to source additional financing to maintain adequate liquidity and continue to operate."

Amigo, which provides money to borrowers who have a friend or family member who is willing to guarantee the loan, said it believed it had "adequate liquidity to support our business". The company's net loan book fell 9.1% to £643m, while revenue increased to £294m from £271m.

"The last 12 months have been a challenging and difficult period, which is reflected in our results today," said acting chairman Roger Lovering.

"We are operating against an evolving regulatory picture, while facing economic uncertainty due to the Covid-19 pandemic."

In a separate announcement, Amigo said it had appointed Vanquis Bank chairman Jonathan Roe to the same role.

He said: "I am delighted to become Amigo's new chairman... I do not underestimate the near-term challenges that Amigo is facing and fully recognise the uncertainties that many of our customers are currently facing too."

Earlier this month, Amigo reached an agreement with the Financial Conduct Authority which gives it until October 30 to ensure that customers with complaints do not need to wait more than eight weeks before their claim is handled.

It came after the lender failed to meet an initial June 26 deadline and had a backlog of around 9,000 complaints at the time.

The FCA has also launched a probe into Amigo's creditworthiness. Last month a potential buyer walked away from a deal to take over the troubled subprime lender, just weeks after telling shareholders it would pay £100m for the business.

However, the unnamed bidder pulled out, citing "the current market environment".

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