Wednesday 18 September 2019

Central Bank licenses new moneylender

The Central Bank building
The Central Bank building
Charlie Weston

Charlie Weston

THE Central Bank has licensed a new moneylender.

British lender Amigo charges 49.9pc for loans and expects to start operations here from March next year.

It brings to 39 the number of licensed moneylenders now operating in this market.

And it comes just weeks after a report written by UCC academics called for the interest rates which moneylenders can charge to be capped.

Most European countries impose interest rate restrictions.

Amigo plans to offer its loans here online, with people with poor credit histories the target market.

A typical loan in the UK is for £4,000 (€4,530) over four years.

Its model means those getting a loan must have someone go guarantor for them, typically family or friends.

The loan, if it is approved, is given to the guarantor.

The company said this was to “cement the relationship” between the borrower and the guarantor and to ensure the person guaranteeing it is comfortable with the arrangements.

Amigo is quoted on the London Stock Market and has £671.7m (€761m) in loans issued to 200,000 customers in Britain.

The company charges a fixed rate of 49.9pc (annual percentage rate) for loans, which means it is classed as a moneylender in this country.

This means a loan for €5,000, over three years, will cost €8,780 to repay.

Getting the same-sized loan over the same period from a credit union will cost just €5,600.

The lender said it had not been decided how exactly it would operate in this market, but it was likely to replicate what it does in the UK in the Irish market.

The Central Bank said: “Amigo Loans Ireland Limited trading as Amigo Loans was authorised as a licensed moneylender on 26 November 2018 and has been included on the Central Bank’s public register.”

Last week the Central Bank had denied it had authorised or regulated Amigo to operate here, and said it could not comment on whether any application has been received from this firm due to its confidentiality obligations.

Amigo gives the address of its Irish operation as Fitzwilliam Square in Dublin.

It experts to start piloting it loans offer here from the start of next year and to formally launch in March.

A company spokesperson claimed it is classed as a “mid-cost credit” provider in the UK, above what is charged by banks for loans, and below pay-day lenders, who can charge up to 1,000pc APR.

Amigo said around quarter of its loans are used go towards debt consolidation.

A quarter are for home improvements or rental deposits.

Another quarter on borrowing to buy a car, and the remaining quarter of loans are for other expenses, such as a wedding or IVF treatment.

In a statement Amigo chief executive Glen Crawford said: “We look forward to exploring the opportunity to provide a flexible, responsible, mid-cost product to Irish customers excluded by mainstream lenders during 2019.”

Amigo floated on the London Stock Market in July, raising some £1.3bn (€1.47bn).

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