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Amigo Holdings gets friendly advice from regulator

The Financial Conduct Authority has revealed the outcome of its Guarantor Understanding Multi Firm (GUMF) review

Amigo Holdings PLC -
Amigo's loans are backed by guarantors, who tend to be friends or family members

Amigo Holdings PLC (LON:AMGO) shares fell after the City watchdog identified areas where the guarantor loans provider could improve its product but did “not raise concerns” over the product itself.

Worries about a regulatory crackdown have whittled away at the shares since Amigo floated in June last year.

READ: Amigo warns of higher impairments as it prepares for regulatory crackdown and hard Brexit

On Wednesday the Financial Conduct Authority revealed the outcome of its Guarantor Understanding Multi Firm (GUMF) review.

The FCA’s work focused on the information that is made available to potential guarantors and whether it is sufficient to ensure potential guarantors reach an informed decision before singing up.

Feedback from the FCA “has not raised concerns with the guarantor loan product itself nor made comments about the underlying business model at Amigo”, the company said.

But as well as a suggestion that the “customer journey could be enhanced”, other areas identified by the regulator for improvement included increasing the explanation of key information provided to potential guarantors and increasing disclosure on the likelihood that guarantors could be called to make payments.

Amigo, which is due to publish half-year results on Thursday, said it had already started to get such changes underway and believes they “will not fundamentally alter the attractiveness of the guarantor loan product” compared to higher-cost alternatives, nor deter guarantors .

Amigo shares, which have lost more than three quarters of their value since the IPO, spiked 5% to 62.5p on release of the news but quickly dived back into the red, down 1% to 59p.

Quick facts: Amigo Holdings PLC

Price: 8.2839 GBX

LSE:AMGO
Market: LSE
Market Cap: £39.38 m
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