Amigo Loans founder calls for removal of entire board

The majority owner of Amigo Loans has escalated a months-long dispute with the company, pushing to remove its entire board and threatening legal action against them.

In a blog post published on Tuesday afternoon, James Benamor, who owns 61 per cent of the company, said he had a “moral obligation” to act after accusing the company’s existing management of presiding over a “dumpster fire”.

Mr Benamor has been engaged in a war of words with Amigo since last year, accusing it of not doing enough to respond to a rise in customer complaints.

Amigo provides guarantor loans, lending to people with weak credit scores if they have a friend or family member who will bear the risk of default.

Its share price jumped almost 18 per cent on Tuesday. However, the stock is still down more than 70 per cent since the start of the year, and more than 90 per cent since its initial public offering.

Mr Benamor said “a key responsibilities [sic] of the new board of Amigo will be to investigate, provide evidence to the regulator on, and in all likelihood take litigation against, the outgoing board members” for what he said was knowingly carrying out irresponsible lending.

Amigo has denied Mr Benamor’s accusations, and earlier this year said it had carried out a review that concluded there were no “systemic” problems in its approach to lending.

Mr Benamor called for a general meeting to be held “as soon as possible” and said he would nominate Sam Wells, a former Amigo executive, to take over as chief executive. Nick Makin, a solicitor, will be nominated as independent chair.

Amigo said it was “consulting with its regulators and its advisers about the implications of this notification and the appropriate next steps”.

It added that it had offered to work with Mr Benamor “to ensure that the board changes are conducted in an orderly manner”.

Mr Benamor founded the company in 2005 and helped to popularise the industry, but stepped back from involvement in the company shortly after its IPO in 2018.

However, he returned to reclaim two board seats in November and had since been engaged in a war of words with its new management.

Last month, Mr Benamor again quit the board and accused Amigo of “committing slow motion suicide” in a lengthy blog post that pushed the company’s shares to a record low.

In the first blog post, he claimed to have voted against the company’s decision in January to start formally looking for a potential buyer. Amigo denied this, and on Tuesday it said Mr Benamor had reiterated his support for the sales process to continue.

The company has struggled to overcome rising regulatory concerns, as the sector’s rapid growth caught the attention of the Financial Conduct Authority. New chief executive Hamish Paton attempted to pre-empt a crackdown by overhauling Amigo’s approach to lending last August, but Mr Benamor dismissed the efforts. Mr Paton resigned when Mr Benamor reasserted control of the company in December, but has continued to run the company while serving his notice period.

Amigo’s difficulties have been exacerbated by the coronavirus crisis. The company halted almost all new lending late last month as the disruption made it difficult to carry out affordability tests and fund new lending. The company said it would focus on helping existing customers who have been affected by the disease.