It seems scarcely believable that a company like Amigo could pretend to be a legitimate enterprise. This money-lending business was built on a morally-dubious premise: it would advance money to you if you could find someone creditworthy to guarantee the loan if you failed to pay.
It’s easy to see how a desperate borrower might lean on a friend or relative. The guarantor would not need to put up anything, and would be helping out a mate. The cost came later, when a usurious 50per cent interest rate started to overwhelm the borrower, and the mate was called upon to divi up.
When JP Morgan Cazenove, who should have known better, brought Amigo to the stock market in 2018, it was valued at £1.8bn. After a brief pop, it has been downhill ever since, as the Financial Conduct Authority worked out what an unfriendly business Amigo really was. The authority’s demand for compensation to borrowers and their mates effectively bankrupted the business.
In addition, the FCA levied a fine of £73m. But here’s the twist: there’s no money left to pay it, so Amigo has been let off. It is now looking for a mate or two to help out, so it can pay some compensation to all those wretched borrowers. At 3p a share, the business is valued at £15m, or about one-third of the money it needs to survive. What it really needs, of course, is a credit-worthy guarantor…
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