Amigo Loans chief executive said the lender indirectly cashed in the Collapse of controversial towing giant Wonga because regulators keep customers away from high-cost suppliers.
The company, which lends up to £ 10,000 to those with bad credit histories on condition that payments are guaranteed by friends or family, said pre-tax profits in the first half of the year jumped by 66% after an increase in the number of customers.
Managing Director Glen Crawford said the results, the company’s first since joining the FTSE 250 earlier this year, were boosted by Wonga’s downfall despite lenders offering very different products as its failure urged the city watchdog to crack down on the area.
After Wonga’s collapse, the Financial Conduct Authority (FCA) wrote to lenders offering expensive short-term credit to demand that they review their current processes to ensure they are compliant and make the necessary changes, even if it made them go bankrupt.
“Some of the activities undertaken by the regulator have restricted the options available to the segment of the community that cannot get funding from banks,” Crawford said. “Did we indirectly benefit from this FCA move? Yes, I think we did.”
Mr Crawford said it was “frustrating to be in the same box as Wonga” because Amigo doesn’t charge as much as payday loan companies. Although he charges 49.9% interest rates, he said there were no hidden costs and the group had no plans to cut rates.