LONDON (Reuters) - Amigo (L:AMGO) said on Tuesday it has dropped plans to resume new lending until 2021, and would instead focus on loan collections and clearing a backlog of customer complaints as the pandemic continued to cast a pall over its business.
The British subprime lender had said it was making preparations to restart lending as soon as possible but has revised this timetable in view of "continued uncertainty" as the UK enters a second COVID-19 lockdown on November 5.
"We are fully aware of our responsibilities as a lender and the important role that we play for millions of people in the UK that are unable to get a loan from a mainstream bank," the company said.
Amigo said it had "turned a corner" in its handling of complaints but the overall number received has remained at a high level for longer than expected.
It has stepped up capacity to manage the volumes and was taking a robust approach to dealing with claims management companies (CMCs) including reporting concerns about the behaviour of specific firms to the Financial Conduct Authority.
It now expects provisions to resolve such complaints to rise from 116.4 million pounds at the first quarter to in excess of 150 million pounds, leading to a profit and loss charge in excess of 85 million pounds.
During the three months to 30 September 2020, Amigo settled around 47 million pounds of redress to customers. Around 60% was settled by cash payments, with the remaining amount handled by adjusting loan balances.