Update on Complaints and Complaints VReq with FCA

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

3 November 2020

Amigo Holdings PLC

("Amigo" or the "Company")

Update on Complaints and Complaints Voluntary Requirement with FCA

Amigo is today providing an update on complaints and the progress made with the Voluntary Requirement ('VReq') related to complaints announced on 3 July 2020.

Complaints VReq

Under the terms of the Complaints VReq, Amigo agreed with the Financial Conduct Authority (the 'FCA') to reach a position by 30 October 2020 where all complaints were dealt with within the defined regulatory period of eight weeks. A total of 25,571 complaints were subject to the requirements of the VReq.

As of 30 October 2020, Amigo had reviewed and reached a decision on all 25,571 of the complaints included within the VReq. Amigo has yet to issue the final responses to customers on 2,517 of those complaints.

Of the outstanding complaints yet to receive a final response by 30 October 2020, 2,209 relate to a specific group of complaints where significant guarantor payments on a loan have been a feature. The methodology for calculating redress for this specific group of complaints is being discussed with the FCA. Work to implement a revised redress approach has impacted our ability to issue a final response by 30 October 2020 for this section of complaints. Of the remaining outstanding cases under the VReq, 238 relate to cases where Amigo continues to work with a third party to collect the necessary information required to allow Amigo to calculate the redress due.

Update on complaints

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 are therefore reviewing our volume assumptions within our forward-looking provision to reflect this extended period of high volumes. Given the increase in complaints received, notably from claims management companies (CMCs), it is difficult to quantify the impact but current expectation is that the provision for complaints will increase from £116.4m at Q1, to a level in excess of £150m, leading to a P&L charge in excess of £85m. We are working through this and expect to update the market with our results for the half year on 26 November 2020.

During the three months to 30 September 2020, the second quarter of our financial year, Amigo settled around £47m of redress to customers, of which approximately 60% was settled by cash payments, and the remaining amount dealt with through loan balance adjustments.

Continued engagement with regulator

We are in regular contact, at a senior level, with the FCA and the FOS to agree a way forward.  We have continued to increase our internal resource capacity to manage the volumes and we are taking a robust approach to dealing with the CMCs, including reporting our concerns about the behaviour of specific firms to the FCA.

As previously reported, Amigo is making preparations to restart lending as soon as possible, but given the continued uncertainty, we anticipate that this will be not before 2021. Given the low volumes currently being lent to key workers and owing to the challenges presented by the imminent second lockdown, we have decided to focus our resources on collections and complaints until we return to more meaningful levels of lending in 2021.

Adequate liquidity as at 30 October 2020

Cash collection remains robust and we have unrestricted cash of c.£140m held within Amigo Loans Ltd, as at 30 October 2020, and adequate liquidity to continue to fund operations and support our customers. 

Gary Jennison, CEO of Amigo, said: "Amigo has reviewed and reached a decision on all cases included in the complaints voluntary requirement we agreed with our regulator. It is a testament to the efforts of the whole team that this has been achieved by the end of October, notwithstanding the c.10% of cases that have a specific, known reason why they have yet to receive their final response from Amigo.

While operationally we have turned a corner with complaints, the sustained volume we are seeing will have an impact on the complaints provision going forward. We have placed the provision under review and a full update will be provided at our half year results. Working with our regulator to fix the complaints situation is our number one priority and this is non-negotiable.

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. We are fully aware of our responsibilities as a lender and the important role that we play for the millions of people in the UK that are unable to get a loan from a mainstream bank."

Contacts:

Company

Amigo Holdings PLC        [email protected]                    

Kate Patrick                      Head of Investor Relations         

Roger Bennett                  Company Secretary

Media

Hawthorn Advisors         [email protected]

Lorna Cobbett                  Tel: +44 (0)7771 344 781

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014. The person responsible for this announcement is Roger Bennett, Company Secretary.

Senior Secured Notes

This announcement constitutes notice by Amigo Luxembourg S.A. (the "Issuer") to the holders of the Issuer's 7.625% Senior Secured Notes due 2024 (for the notes issued pursuant to Rule 144A of the United States Securities Act of 1933, ISIN: XS1533928468 and Common Code: 153392846; for the notes issued pursuant to Regulation S of the United States Securities Act of 1933, ISIN: XS1533928625 and Common Code: 153392862) (the "Notes") issued pursuant to pursuant to Section 4.03(a)(3) of an indenture dated January 20, 2017 among, inter alia, the Issuer, the guarantors named therein and U.S. Bank Trustees Limited, as trustee and security agent.  Amigo Holdings PLC is the indirect parent company of the Issuer. This announcement shall constitute a "Report" to holders of the Notes.

About Amigo Loans

Amigo is a public limited company registered in England and Wales with registered number 10024479. The Amigo Shares are listed on the Official List of the London Stock Exchange. Amigo is a leading provider of guarantor loans in the UK and offers access to mid‐cost credit to those who are unable to borrow from traditional lenders due to their credit histories. The guarantor loan concept introduces a second individual to the lending relationship, typically a family member or friend with a stronger credit profile than the borrower. This individual acts as guarantor, undertaking to make loan payments if the borrower does not. Amigo was founded in 2005 and has grown to become the UK's largest provider of guarantor loans. In the process, Amigo's guarantor loan product has allowed borrowers to rebuild their credit scores and improve their ability to access credit from mainstream financial service providers in the future. Amigo is a mid‐cost provider with a simple and transparent product ‐ a guarantor loan at a representative APR of 49.9 per cent., with no fees, early redemption penalties or any other charges. Amigo Loans Ltd and Amigo Management Services Ltd are authorised and regulated in the UK by the Financial Conduct Authority

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