Controversial short-term loan tycoon James Benamor is set to be the biggest individual beneficiary of exorbitant short-term loans fees in the UK when his firm, Amigo Loans lists on the London Stock Exchange.
Benamor has been accused of being a loan shark operating on the “right side” of the law. His firm, Amigo loans is guilty of charging hard-up customers interest rates up to 50%. The businessman is set to pocket over 350 million pounds when his firm lists on the LSE.
Amigo Loans are marketed as a better alternative to payday loans in the UK. The loans are advertised on radio and TV among other media. They target low- income individuals with poor credit and high debt levels.
Amigo recorded a £72 million pre-tax profit last year. The lender’s loan book grew from £266 million to £647 million last year (2016 to 2017). This figure translates to a 90% market share in the UK guarantor loans market. Amigo servers 182,000 borrowers. A record £48 million in loans were taken by existing customers who had existing loans according to the latest financial results.
Amigo’s profits recently and over the years have helped Benamor, 41, amass approximately £380 million.
Benamor who is a British businessman of Tunisian origin started Richmond Group, a money lending company at 21 in his kitchen in Bournemouth. Benamor began issuing loans to individuals who had been denied credit by mainstream lenders.
Back in 2009, an investigation carried out by BBC accused Benamor of profiting by misleading desperate borrowers. A Richmond Group subsidiary offered to give loans to individuals with poor credit in exchange for £50 in fees, but in most cases, customers received a list of lenders without receiving any loans. The firm, Post Net, was found guilty of misleading desperate borrowers by falsely guaranteeing loans. This was according to a Fair Trading statement issued on the matter.
Nevertheless, Benamor has continued presenting himself as an honest businessman. His social media profiles (Facebook) contain very little evidence of his fortune apart from a few pictures of him and his family on exotic holidays.
Benamor has shared about his charitable ventures which include climbing Mt. Kilimanjaro and funding Education in Africa. There are also pictures of him attending a royal function (hosted by Prince Charles) in March 2018. His employees are also “lucky enough” to enjoy perks like hair styling and massage therapy services as well as use his cars and properties in London, France and Amsterdam.
Benamor has been on record stating that he got into a lot of trouble when he was young having been a drug user. He has also stated he was “a petty criminal” in the past.
The Amigo Difference
Amigo Loans are different from payday loans in that; a borrower needs a guarantor (who could be a friend or family member) before they can qualify for a loan.
This requirement has made it possible for Amigo to offer loans successfully to people who wouldn’t otherwise qualify for loans. Amigo has been able to loan individuals with terrible credit as well as those with “mountains” of debt.
According to consumer champion, Martin Lewis, Amigo adverts stating that their loans are affordable make him feel “slightly sick”.
Stella Creasy is of a similar opinion. The Labour MP has been on record calling for regulators to crack down on legal loan sharks trapping needy borrowers.
The Financial Ombudsman has also linked Amigo loans to unethical lending practices by giving specific examples of how Amigo has been hounding guarantors who include individuals with terminal illness and mental health issues.
According to Amigo’s official website (https://www.amigoloans.co.uk/), the lender charges a 49.9% interest and promises to lend up to £10,000 within a day. The lender also stresses that being unemployed isn’t an obstacle to accessing Amigo Loans.
Although the lender also goes ahead and stresses the fact that Amigo loans are affordable, a customer who borrows £10,000 over 5 years ends up paying £23,715.
Amigo Loans can easily qualify as high-risk loans; however, Amigo is of a contrary opinion.
After announcing intentions to list his firm on the LSE, Benamor stated that his company was a better alternative to payday loan lenders charging ultra-high interest. He stated that the guarantor requirement allows Amigo to offer financing to borrowers who would otherwise be left to borrow less flexible and more expensive forms of loans.
Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.