Just as it looked like Amigo Loans was ready to turn a corner, today it dropped a bombshell that the overall number of complaints it is battling against has remained at a high level for longer than expected and it will be taking a bigger hit on its P&L.
At first we thought that this was unfortunate event but then we remembered the recent history of Amigo Loans as it battled a takeover from founder James Benamor. Needless to say, it somewhat incensed us.
It was very quick to present a view to investors that everything was under control and this was just a month or two back. Let’s rewind…
11 September – fighting off James Benamor and insisting it kept its existing board
“…any unnecessary changes to the Board at this critical and unprecedented time are not in the best interests of the Company or its shareholders as a whole and may be disruptive and damaging to the Company and its stability and ability to focus on the current key challenges facing the business and to take the business forward.”
“Nayan Kisnadwala is an experienced CFO with a deep understanding of the Company and its current issues.”
29 September – won its fight – indicating complaints weren’t increasing and will start lending in 2020
“We have not seen a material change in Complaint volumes, which have remained volatile over August and September. However, we continue to make progress with our handling of these complaint volumes. We are preparing to restart lending on a prudent basis by the end of 2020.”
12 October – new CEO suggest a large number of complaints are not genuine
“There are undoubtably cases where we have done the wrong thing, but a significant number of the claims that we are getting are not genuine claims.”
3 November – complaints remain high and won’t be lending in 2021
“We have turned a corner operationally in our handling of complaints, but the overall number received has, despite continued monthly volatility, remained at a high level for longer than we expected.
“We will be back lending to our customers that need to access an Amigo loan as soon as we can, but do not envisage this being before 2021“
Newcomers to Amigo – be very aware
As an investor, we’d be very concerned in what Amigo has previously been telling the market and the reality of what it has told the market today. The fact that it has gone from telling investors that everything was rosy to then saying it is being heavily plagued by the same core issue in such a short time-frame and won’t be lending again is a huge concern and red flag.
As a business that needed to rebuild trust, it has failed to do so from early doors. Suggesting things were very much on the up and then confirming they are not one month later is not ideal. And this is the number one reason to stay away from Amigo. If it’s hard to trust a business, then stay well away!
Potential investors to Amigo would do well to stay clear of it in our view. Existing investors should hold and hope depending on their entry point – but make no mistake, this will be a long and slow turnaround with many more bumps on the way should it ever come to fruition.