What has happened to guarantor loan firms?

It’s a sector that once dazzled investors, but now it’s under a cloud, writes James Moore

The Financial Conduct Authority has signalled its intention to act on the guarantor loan market (Rex)

The headlines saying that shares in Amigo slumped as “loan growth slows” are a rare example of the media underplaying a story. There’s a bit more troubling the subprime lender than just a modest slowdown.

First, the background: Amigo offers loans to people with bad credit histories so long as they can secure a guarantor to step in if they get into trouble with repayments. Friends, family, you know the drill.

It will lend up to £10,000 at an APR interest rate of just under 50 per cent.