Payday loan companies not evil - customers need to make better choices, says Secret Millionaire (From Bournemouth Echo)
When news happens text pix and video to 80360. Start your message with BE then leave a space.
Educate payday loan customers so they can make better choices, says Amigo Loans boss James Benamor
THE founder of a Bournemouth-based loans firm says customers need to be re-educated in the wake of the furore over high-rate lenders.
Multi-millionaire James Benamor, 36, is CEO of Amigo Loans, which lends, using guarantors, to small businesses and individuals who are struggling to get finance through traditional means.
He spoke to the Daily Echo in the wake of moves by the Archbishop of Canterbury to force payday loan firm Wonga out of business by helping credit unions to compete with it, before admitting his embarrassment that the C of E had indirectly invested in Wonga.
The industry has come under fire for charging extortionate interest rates to people who are already facing financial difficulties.
James said: “The growth of payday loans is a failure two-fold – it’s a failure by the banks and it’s a failure by consumers, who do not have all of the information available to them.
“We make nothing from someone if they go bad. It’s not a secured loan where we can take someone’s house and sell it on. We have gone for the 49 per cent (interest) figure because it’s up front and honest and it’s there.
“What that means is we only make money from someone when they pay off their loan in the last year.
“Wonga and the other payday lenders are all lending at the same rate and a lot of people that we talk to do not know the difference between 49 per cent and 4,000 per cent.
“The way that payday lenders work is deeply flawed because it’s not responsible.
“I think the market, the government and others have a role to play in that we need to make customers choose more wisely.
“These companies are not evil for charging 4,000 per cent; the point is customers in the UK are making some really bad choices at the moment.”
Amigo started in 2005 and now employs 280 staff. It is soon to move from its Richmond Hill base to the Triangle.
It has lent to 100,000 people and 20,000 small businesses and has won a string of awards.
James added: “What we noticed was there were a lot of people contacting us as a broker looking for loans, and lenders that we were working with were operating in one way – using a computer credit score.
“We looked at banks 20 or 30 years ago where they dealt with you in person.
“The banks stopped doing that.”
He said he saw finance now similarly to the food industry 15 years ago.
“What you got was people saying ‘I want to know what’s in my food’. I think finance is the same.
“You start getting scandals like PPI and people realise to what degree they were getting ripped off.
“At the very least I think you will see customers moving towards transparency and we’re taking a gamble on that, doing one product,” added James.
Entrepreneur of the year
James Benamor, a father-of-five born and raised in Bournemouth, won the Ernst and Young entrepreneur of the year award in 2010 and featured on Channel Four’s Secret Millionaire programme.
He started his own loan brokerage company, the Richmond Group, in 1999 at the age of 21.
Unable to afford advertising, he printed 30,000 leaflets and delivered them himself on foot, walking 300km.
Comments are closed on this article.