A businessman accused of being a ‘legal loan shark’ charging rates of 50 per cent to hard-up customers is to pocket hundreds of millions when his firm floats on the stock exchange.
Controversial tycoon James Benamor will make a huge windfall, thought to be around £350million, when Amigo Loans lists.
It says it is a responsible alternative to payday loans, advertises on TV and radio and targets people with poor credit records, low incomes and high levels of debt.
Controversial tycoon James Benamore will make a huge windfall, thought to be around £350m, when Amigo Loans lists
Amigo made pre-tax profit of £72million in the year to March. Its loan book has swelled from £266million in 2016 to £647million in its last financial year, while serving 182,000 borrowers.
It puts its share of the guarantor loan market at close to 90 per cent.
Some £48million of its loans were from existing customers who had taken another loan. This has helped Benamore, 41, a father of eight, amass an estimated £380million.
At 21 he set up a money lending firm, Richmond Group, from his Bournemouth kitchen, offering loans to people refused credit.
In 2009 a BBC investigation accused him of making a fortune by misleading people over loans.
A subsidiary of Richmond Group offered to arrange loans for people with poor credit for a £50 fee.
But in many cases the customer merely received a list of banks and lenders and did not receive a loan.
The Office of Fair Trading stepped in and said Benamor’s firm, called Post Net, was misleading customers by falsely guaranteeing credit.
Benamor has presented himself as a man of the people: his Facebook page contains little evidence of his wealth, other than pictures of his family on exotic holidays.
He shares information about his charitable exploits, which includes climbing Kilimanjaro and funding schools in Africa.
There are also photos of him and his wife attending a function at Clarence House, hosted by Prince Charles in March.
Staff are treated to perks such as a massage therapist and hair stylist, use of cars and properties in Amsterdam, France and London.
Benamor has previously said: ‘When I was younger I got into quite a lot of trouble. I was taking a lot of drugs. I was basically a petty criminal.’
A key difference of Amigo is that, to qualify, applicants need a guarantor – a family member or friend.
This allows firms like Amigo to offer loans to people with terrible credit record who are already saddled with debts.
Consumer champion Martin Lewis has said adverts describing its loans as affordable left him feeling ‘slightly sick’.
Labour MP Stella Creasy, who has called for a crackdown on lending to vulnerable households, said: ‘If your friends are giving you Amigo loans you don’t need enemies.
‘These legal loan sharks are trapping people in debt and need to be cracked down on by the regulators.’
The Financial Ombudsman highlighted shocking examples of Amigo hounding guarantors, including a woman who had a terminal illness, and another with mental health issues.
Amigo, which charges an interest rate of 49.9 per cent and promises to provide up to £10,000 within 24 hours, says on its website that being unemployed is no obstacle to easy credit.
Although it describes its loans as affordable, someone who borrowed the maximum of £10,000 over five years would repay £23,715. It rejected claims that it offered high-risk loans.
Announcing its intention to float on the London Stock Exchange, Amigo said it was a better alternative to ultra-high interest payday lenders.
It said: ‘The requirement of a guarantor allows the group to provide financing to a segment of consumers who would otherwise only be able to obtain more expensive and less flexible forms of non-standard finance.’