Amigo founder claims customers given ‘irresponsible’ loans in explosive blog post
THE FOUNDER of guarantor loans firm Amigo has accused the company of giving customers loans "irresponsibly" in an explosive blog post.
James Benamor, who set up the high-cost lender in 2005, said Amigo was "committing slow motion suicide, whilst playing out he script of Brewster's Millions" - the 80s film where a character tries to spend money as quickly as possible.
He added: "I found that Amigo had, for six months, been lending almost entirely in a way that matched their own complaints team’s definition of "irresponsible"."
Mr Benamor also accused the financial regulator of changing "its stance on irresponsibly lending".
Guarantor loans are one of the fastest growing ways for people with poor credit histories to access money.
They work by allowing a friend or relative to guarantee loan repayments if the borrower can't.
How to claim compensation from guarantor loan firms
IF you think you are owed compensation from a guarantor loan lender then here's how to claim according to money blogger DebtCamel:
You'll need to prove that you couldn't afford to take out the loan at the time that you borrowed it. If having the loan meant that you couldn't pay your bills or other debts then you were irresponsibly lent to.
You may also me entitled to compensation if you had any late repayments, or if you took out back to back loans because this shows that you really couldn't afford to take out a new one.
Look back through your emails, bank statements and credit reporter for evidence.
You'll need to write a formal complaint letter to each lender explaining how you were irresponsibly lent to and include the evidence.
You'll need to cite "unaffordable loans" and ask for a refund of the interest and charges you paid, as well as the 8 per cent Ombudsman interest on top.
Make copies of all of the evidence before sending in case anything happens to them.
Also ask for the loan to be removed from your credit record.
You can find a letter template .
Wait up to eight weeks to hear back from them. If you're not happy with the answer, or they don't get back to you, contact the Financial Ombudsman.
This means that both the borrower and the guarantor are liable for the debt.
Amigo is the biggest of the guarantor loans in the UK.
It offers loans over 12 to 60 months at 49.9 per cent interest.
The Financial Ombudsman is currently upholding 90 per cent of complaints about guarantor lenders, not just Amigo.
This means the firm is facing a compensation bill of billions of pounds if customers complain.
In March last year regulator, the Financial Conduct Authority, has warned it would be closely monitoring guarantor loan firms as part of a wider industry crackdown.
A BBC Panorma investigation in June last year revealed that over £1billion is owed through these types of loans.
In January, the firm put itself up for sale, citing a "challenging operating environment".
Sara Williams, founder of , said: " I think a customer should not worry about who is right or what will happen here.
"Just think about your own Amigo loan.
"If you feel it was affordable - you could repay it without getting behind with bills or having to borrow more - then you don't have a reason to complain.
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"But if you think better checking by Amigo would have shown the loan was not affordable for you, then put in a complaint."
A statement from Amigo said: ";Mr Benamor’s statement contains several material inaccuracies and is fundamentally incorrect in a number of respects.
"Amigo does not accept Mr Benamor’s account of events.
"Amigo remains fully committed to fulfilling all of its legal and regulatory obligations, and will continue to engage with regulators in an appropriate and constructive manner."
An FCA spokesperson said: “We do not routinely comment on the affairs of individual firms.”