The Financial Conduct Authority (FCA) is investigating guarantor lender Amigo Loans over credit-worthiness assessments, as the battle for control over the firm intensified with legal action.
On the same day (June 1) the lender confirmed its creditworthiness assessments were being investigated, along with the governance and oversight of the process, Amigo also revealed its board is seeking an injunction to stop its founder, James Benamor, replacing them entirely with his own nominees.
The move is the latest development in a bitter public row between the existing board and Benamor, after he recently accused the lender of “committing slow-motion suicide while playing out the script from Brewster’s millions.”
Amigo filed an application on June 1 with the High Court of Justice for an injunction to prevent Richmond Group, its majority shareholder which Benamor owns, replacing the Amigo board with his nominees - Sam Wells and Nick Makin.
In its announcement, Amigo said all its directors have made clear that they are willing to step down “provided it is by way of an orderly succession” and have “no interest in prolonging their appointment.”
Stephan Wilcke, chairman of Amigo, said: “The board has offered to leave, and will do so, but it must be through an orderly process. We cannot risk the Amigo group’s ability either to conduct its FCA regulated activities or to continue as a London-listed company operating in accordance with the UK Corporate Governance Code.”
He added: “Amigo is a publicly-listed, regulated company, not a wholly-owned private subsidiary. We are duty bound to protect the interests of all shareholders and to prevent a majority shareholder acting in breach of the relationship agreement.”
This relationship agreement was made between Richmond and Amigo on June 29 2018, but Amigo alleged Richmond had shown “a continued refusal to abide by the terms of the relationship agreement”.
Amigo’s announcement said the board made the injunction application for the sole purpose of ensuring an orderly process for its replacement.
Richmond Group had sought to replace the existing board by getting resolutions approved at an upcoming general meeting, but Amigo’s announcement added: “The board unanimously believes that the resolutions, if passed, will cause serious harm to Amigo.”
The announcement adds: “In particular, the resolutions carry a significant risk of the FCA imposing variations or restrictions on the ability of Amigo’s trading subsidiaries to conduct regulated activities, rendering the Amigo group’s business inoperable.”
If the injunction application is granted, all shareholders, other than Richmond, will be able to vote on the resolutions at the meeting.
Tweeting in response to the injunction application, Benamor alleged that there was a "significant contradiction between Amigo board’s statement to investors 5/3/20 (regarding my blog) and Stephan Wilcke’s statement as part of the evidence pack for the injunction today."
In another development of a bizarre, embattled period for Amigo, the lender said it is still in talks with a potential buyer, adding that it will provide further updates but with the caveat that there can “be no certainty that any offer will be forthcoming.”
Meanwhile the FCA investigation, which began on May 29, will cover the period from November 1 2018 up until now, and explore whether creditworthiness assessments were compliant.