Shares in troubled loans business Amigo (AMGO) have tumbled 18% to 8p as it warned of a ‘material’ hit to its balance sheet following a wave of complaints.
The loans provider had set aside £35m to deal with a backlog of 9,000 complaints received so far this year, after an agreement with finance watchdog the Financial Conduct Authority (FCA).
But in an update today, Amigo said it has continued to see a ‘substantial increase’ in the rate of complaints, and with the £35 million already set aside having killed off any hopes of a dividend as it looks to save cash, the new wave of complaints is expected to produce another financial hit.
The company said, ‘The additional cost of complaints received subsequent to 31 March 2020 is expected to be material, as a result of the substantial increase in the rate of complaints received.’
The lender had agreed with the FCA in May that it would clear the backlog of complaints by 26 June, but now wants more time and is looking to extend the deadline.
Amigo said it will continue to assess each complaint on a case by case basis to ‘ensure fair outcomes’ for its customers.
The news marks a new low for the company, with its share price having tumbled from 70p at the start of the year having battled with rising complaints, a boardroom coup attempt and investigations from the FCA over its creditworthiness assessment process and oversight.
Amigo has also delayed the publication of its full year results for the year to 31 March, which were meant to be published by the end of June but are now set to be released on or before 23 July.