UK moneylender Amigo sees customer settlement costs rising

British moneylender Amigo Loans has said the cost of dealing with its backlog of customer complaints will be “substantially higher” than the £35m (€39m) initially anticipated.

Part of the reason for that, however, is that the controversial lender has agreed, with the UK’s Financial Conduct Authority, a four-month extension to its deadline to deal with the outstanding complaints to the end of October. The company said that extra time is likely to lead to an increase in the number of complaints received and a “substantially higher” settlement cost than previously expected.

Amigo said its liquidity remains strong but that it expects to report a material increase in its year-end provision in respect of the increased number of complaints being received.

Amigo’s backlog deals with its UK customer base. The company entered the Irish market last year. Earlier this month, the Central Bank said it would be tightening regulations around such licensed moneylenders, who offer quick loans but at often exorbitant interest rates.

Moneylenders, here, will be required to advise customers if a loan may not be in their best interest and will have to tell customers of alternative options.

The Central Bank also said the use of such firms, for financial assistance, should only be as a last resort.