Amigo shares sank after it was told it will not be able to pay any bonuses or dividends without the City watchdog’s permission.
The Financial Conduct Authority (FCA) will require Amigo Loans, which has been branded a ‘legal loan shark’ by MPs, to obtain its approval before transferring any assets out of the group.
The latest chaos at the controversial lender comes as it battles with an enormous backlog of complaints, which it reckons could cost more than £116million.
Crackdown: The Financial Conduct Authority will require Amigo Loans, branded a ‘legal loan shark’ by MPs, to obtain its approval before transferring any assets out of the group
It is also embroiled in a battle with its founder James Benamor who is attempting to make a comeback at the company.
Although Benamor has succeeded in clearing out the board – forcing chairman Roger Lovering, two chief executives and several directors to resign – he has failed to win enough votes from shareholders to be reappointed himself.
Amigo said that despite the order from the FCA, it has enough money to continue its operations and support customers.
And it added that it is ‘focused on addressing Amigo’s legacy issues, restoring confidence in its corporate governance and building a sustainable business for the long term’.
Stock Watch – Midatech
Pharmaceutical minnow Midatech started the week on the front foot following successful results from an early stage trial.
The study looked at the effects of a cancer drug that targets a type of inoperable brain tumour affecting children.
Midatech’s treatment was found to prolong the lives of children who are on average only given 10 months to live once they are diagnosed.
Shares in AIM-listed Midatech surged 10.6 per cent, or 3.5p, to 36.5p.
Its business model is controversial – it lends money to people with poor credit scores, charging them interest rates of up to 49.9 per cent, as long as they have a friend or family member willing to pick up the bill if they fail to meet repayments.
The company has been bombarded by problems this year, including an FCA investigation into whether it had properly assessed whether customers could afford its loans.
Just last week, new chief executive Gary Jennison wrote a letter to shareholders, assuring them that he would get the business ‘back on track’ and build relationships with the regulator.
But investors were dismayed by the company’s latest run-in with watchdogs, sending shares down 10.6 per cent, or 1.11p, to 9.33p by the close.
The FTSE 100 started the week in the red after it was held back by a strong pound, which rose to almost $1.30 on hopes that a Brexit deal could still be agreed.
When the pound grows stronger it weighs on the dollar-denominated earnings of overseas multinational companies that are listed on the Footsie.
London’s premier index dropped 0.59 per cent, or 34.93 points, to 5884.65, while the more domestically focused FTSE 250 inched 0.24 per cent higher, up 43.17 points, to 17866.08.
Japan-inspired retailer Superdry also reported a director deal, after co-founder and executive director Julian Dunkerton scooped up 91,817 shares for almost £140,000.
He spent about 150p apiece on the new stock. But it did little to boost shares, with Superdry closing down 1.6 per cent, or 2.4p, to 149p.
Mike Ashley’s conglomerate Frasers Group – which owns the likes of House of Fraser, Sports Direct and Evans Cycles – had a better day following weekend reports the entrepreneur has made another attempt to buy the ailing department store chain Debenhams.
Ashley submitted an improved offer this month, according to weekend media reports.
Frasers shares rose 0.7 per cent, or 2.6p, to 357.4p by the close.
Elsewhere in retail news, software minnow Checkit clinched a three-year contract to provide services to the John Lewis Partnership, which will allow the Waitrose-owner to automate lots of paper processes and documents.
The move means Checkit – which surged 5.7 per cent, or 2.5p, to 46.5p – can cash in on a digital push under new boss Sharon White.
Holiday giant Tui got a cheer from investors, rising 6 per cent, or 16.5p, to 291.8p, after it appointed four employee representatives to the company’s supervisory board.