‘Legal loan shark’ looks to tackle its public image

HIGH-INTEREST loan firm Amigo has vowed to tackle ‘urban myths’ about its lending practices after posting a surge in profits.

It targets customers with a bad credit history, offering guarantor loans where a friend or family member agrees to cough up if they cannot afford to pay back what they owe.

Charging interest of 49.9pc, it has been branded a ‘legal loan shark’ by Labour MP Stella Creasy – and red-hot growth in the guarantor market has sparked concern from the City watchdog.

But bosses claim they follow all the rules and are important alternative to High Street banks.

Chairman Stephan Wilcke said: ‘Amigo being a publicly listed company has raised the profile of the guarantor loan product and fuelled some urban myths about us and our customers. In future we will work harder to dispel those myths.’

He defended the decision to appoint Hamish Paton, the former boss of notorious rent-to-own firm Brighthouse, as Amigo’s next chief executive.

Wilcke said Paton was responsible for fixing problems when he took charge of Brighthouse.

Amigo raked in a profit of £111m for the year to March – up 68pc on the previous 12 months – and customer numbers surged 23pc to 224,000. It announced a total annual dividend of 9.32p per share. But its accounts also show a rise in loans that are overdue.

As of March 31, a total of £42.5m was owed by customers a month or more behind, equal to 5.4pc of Amigo’s total book.

A year earlier, £22.2m or 3.3pc of the total was this far overdue.

Amigo said the two figures are not comparable because it has changed its accounting standards..

Shares closed up 8.8pc, or 19p, at 234p last night but are nearly 15pc down from the float price of 275p when it listed last year.