Watchdog launches probe into guarantor lender Amigo

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THE UK's financial regulator has launched an investigation into troubled sub-prime lender Amigo.

The Financial Conduct Authority (FCA) commenced an investigation on May 29 into the lender's assessment process for customers' "creditworthiness", Amigo said.

Amigo, which has seen its shares tumble over the past 12 months amid the threat of heightened regulations, provides loans to borrowers with poor credit histories by signing friends or family members to act as guarantors.

The investigation will cover the period from November 1 2018 to the present date.

It comes amid talks between Amigo and a potential buyer for the business, which it says are still ongoing after first revealing discussions last week.

It said the unnamed suitor is offering 20.9p per share in a move which would value the company at £99.3 million.

Amigo said it was awaiting a response from majority shareholder and founder James Benamor's company Richmond Group over the acquisition proposal.

The guarantor lender has had an increasingly acrimonious relationship with Mr Benamor, who sat on its board until March.

On Monday, Amigo also filed legal action against Mr Benamor's Richmond Group to prevent it from voting in favour of resolutions to axe the entire company board.

The company said its board has "offered to leave" following staunch criticism from the founder, but stressed it believes it must be "through an orderly process".

In April, Mr Benamor submitted a formal request for an emergency general meeting to oust all directors, including its chief executive Hamish Paton and chairman Stephan Wilcke.

He accused the company's existing management of presiding over a "dumpster fire" in a lengthy blog post.