“Guarantor lending services” sounds like a reasonable line of business. This is how Amigo Holdings is described, but the reality is altogether less reasonable. Amigo grew like topsy on the distinctly doubtful model of lending you money if a credit-worthy mate or relative would guarantee to pay it back if you failed to do so. Whether you did or not, the interest rate charged is a scorching 49.9 per cent.

The scope for moral blackmail here is obvious: “Honestly, I’ll pay it back mate, all you have to do is fill in a form, you don’t have to lend me a penny.” The stock market, in its amoral way, decided that this business was so attractive that it was valued at £1.2bn after it listed in 2018. Since then it has been an entertaining (for outsiders) tale of internecine strife and a realisation of just what an unfriendly business Amigo really is.

As more customers have been forced to understand what the word “guarantee” really means, so the defaults and claims that the original loans were mis-sold have risen, to the point where they threaten to overwhelm the company. The shares have joined the 90 per cent club, down from 297p to just 14p, and Amigo is seeking approval to use a “scheme of arrangement” to avoid going bust. If the scheme fails, compensation claims may be worthless. Rather, take (much) less than you may be due, and we’ll top up with 15 per cent of the profits we make over the next four years.

That presupposes there will be meaningful profits from a lending business which is a better alternative only to gentlemen with baseball bats. But without the scheme, Amigo’s current management told The Guardian, the outlook is a messy collapse. This could wipe out any compensation claims, but is unlikely to do the same for the borrowers’ outstanding debt. The Financial Services Authority is being urged to get involved; it is stuck between a rock and a hard place, and has decided that the creditors should decide. The whole shambles comes before the court next month.

An offer you can refuse

If you have savings of any size, you will probably have received a stiff, formal-looking invitation from St James’s Place – not the palace, sadly, but from a business which would like to look after your money. It is a highly successful business, at least for the executives and, recently, for the shareholders as the price has regained its pre-pandemic peak. With £129bn to look after, SJP can claim to be the UK’s largest wealth management company.

Quite why this should be so is something of a mystery, since it does not seem to be all that good at managing the wealth. A comprehensive analysis by Yodelar, a firm of investment advisers, shows just how poor the performance of the funds has been. It concludes that eight out of 10 funds have “consistently underperformed” their benchmarks and that “the SJP Alternative Assets fund has been the worst performing of all 145 funds in its sector over the last 1, 3 & 5 years.”

Few in the industry will be surprised by Yodelar’s findings. The managers of the funds are probably no worse than the (very mediocre) industry average, but the real cost to the owners ls the capital is the fees. SJP has found many ways to charge its clients, in addition to the more standard costs. David Stevenson at Citiwire describes SJP’s Balanced unit trust portfolio as “bog-standard” but it charges a 5 per cent initial fee and 1.58 per cent a year thereafter. A better description would be off the top of the scale. To outperform the market by 2.58 per cent a year over five years is not easy, but unless SJP can do this, its investors will have lost out. It’s quite hard to find any comparable pooled investment that charges more for a similar service.

The broader point here is the familiar one, that the fund management industry works for the fund managers, not for those whose money it is managing. The managers are interested in performance only insofar as it draws in more money to manage, and thus raises their fee. Despite the growth of low-cost tracker funds, this shows few signs of change, but at least investors know what to do if one of those fancy invitations drops through the letterbox.

Who needs shareholders?

For decades, the John Lewis Partnership model has been enthusiastically lauded from all quarters. Look what we can do without those greedy shareholders! See the happy staff, knowing that it is their business and that a generous pension awaits them after their loyal service? Recently, enthusiasm has been lacking. The hubristic expansion under the previous management has ended in tears, and the store closure programme, which newish chairman Sharon White has been forced to implement, means job losses and even encompasses some outlets which have only just opened.

The earlier expansion has left John Lewis so financially weak that it may lack the capital needed to compete in the post-high street age. If only it had some of those greedy shareholders. They might see the potential in one of the great names in UK retailing, and put up more of their capital to see the business through the crisis. After all, they have subscribed to rescue far worse cases, like shopping mall group Hammerson and cinema group Cineworld. John Lewis customers have a deep reservoir of goodwill, but the employee ownership model would have to go. Charlie Mayfield, who oversaw the ill-judged expansion, ran the Commission for Employment and Skills, a quango “providing strategic advice and insight on skills and employment issues”. It’s not likely that Dame Sharon will be consulting him.