The Amigo Holdings PLC (LON: AMGO) share price surged 41% after announcing the conclusion of the Financial Conduct Authority’s (FCA’s) enforcement action against the company for bad lending practices in the period from 2018-2020.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.
The guarantor lender acknowledged that were it not for its weak financial position, the firm would have been liable for a penalty worth £72.9 million. Still, the FCA did not impose a penalty since it would have plunged the lender into financial distress and jeopardised the firm’s ability to compensate the redress creditors.
Top Broker Recommendation
- eToro Top stock trading platform with 0% commission – Read our Review
- Tickmill Regulated by the FCA – Read our Review
- Admirals (Admiral Markets) More than 4500 stocks & ETFs available – Read our Review
- Spreadex Spreadex has been around for a long time – Read our Review
- IG Top-tier regulation – Read our Review
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY
Amigo now has to raise the much-needed capital to complete the last requirement under the Scheme of Arrangement sanctioned by the High Court in May 2022. The lender has come a long way since the FCA’s enforcement action began in 2020. The company now has a new management team and has overhauled its lending practices.
The mid-cost credit provider also reminded investors that it has cooperated fully with the FCA and has worked tirelessly to adopt much fairer lending practices under its new brand RewardRate. The company is currently running a pilot lending program under the new brand.
Amigo celebrated the end of enforcement action by the FCA as a crucial business milestone and acknowledged the time and resources invested by the regulator in investigating its historical business practices and the harm done to consumers by the previous management team.
Despite today’s announcement, Amigo still faces the Herculean task of raising £45 million via a 19-for-1 share issue that will significantly dilute existing shareholders. The lender is struggling to find a lead investor for the capital raise, but this may change following today’s announcement.
Danny Malone, Amigo’s CEO, said:
“I would like to apologise again to any customers impacted for the past failings in lending practises that occurred during the period 2018-2020. As a new Board and management team, we fully accept the lessons that needed to be learnt for the future. Our focus remains on rebuilding a business that delivers better outcomes for customers, backed by stronger lending controls and a better culture.”
*This is not investment advice.
The Amigo share price surged 41.06% to trade at 3.71p, rising from Monday’s closing price of 2.63p.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.
