June 1, 2020 / 7:01 AM / a month ago

UPDATE 1-UK watchdog launches probe into subprime lender Amigo

(Adds background on COVID-19 program, sale)

LONDON, June 1 (Reuters) - The Financial Conduct Authority has launched an investigation into the creditworthiness assessment process of subprime lender Amigo Holdings, the company said on Monday.

Amigo, which provides loans to borrowers who struggle to obtain credit from mainstream lenders if a friend or family member can act as a guarantor for them, said that the investigation began on May 29 and covers the period ranging from November 2018 to the present.

It is looking at “whether or not Amigo’s creditworthiness assessment process, and the governance and oversight of this, was compliant with regulatory requirements,” the statement said.

Amigo said last week that it had received a potential takeover offer but had been unable to engage with its majority shareholder Richmond Group - which is controlled by Amigo founder James Benamor - on its willingness to accept the offer.

Benamor had stepped back from running Amigo after it listed in 2018, but has been embroiled in a public row with the company’s management over strategy since late last year.

The coronavirus has added to the pressure on Amigo, causing it to pause lending to everyone except key workers “in exceptional circumstances” from March 24. (Reporting by Maiya Keidan Editing by Rachel Armstrong)

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