SHARES in the Bournemouth-based loan company Amigo have plunged after it warned that increased regulation and the risk of a no-deal Brexit would hit growth.

The company warned that it expected growth this financial year to be “broadly flat”, despite revenue rising 13.7 per cent year-on-year to £71.5million in the first quarter.

Amigo said it had updated its financial reporting “to reflect the increased probability of a no deal Brexit and the corresponding adverse effect this is expected to have on the economy and on consumer sentiment”.

It added: “While past recessions have demonstrated the resilience of our businesses, we believed it is prudent to factor a deteriorating economic outlook into our impairments model.”

Amigo lends money at 49.9 per cent APR to people who have a poor credit history but can find a guarantor to support them.

Although statutory profit after tax was up 47.2 per cent to £18.1m, adjusted profit after tax fell 6.4 per cent to £20.4m.

Amigo has set aside £2m for expected losses from existing customer complaints, after seeing an increase in the number of cases ruled in favour of customers by the Financial Ombudsman.

It was prioritising efforts to attract new customers over re-lending to existing customers. It had “enhanced and tightened” its credit policy and had invested in operations, compliance and complaints functions.

Amigo said it supported efforts by the Financial Conduct Authority to make sure loan guarantors were fully aware of their responsibilities after the authority highlighted the dangers of persistent debt.

The lender said only 12 per cent of customers have “topped up” their Amigo loan more than twice.

Shares in Amigo Holdings stood at 155.8p last Wednesday were 76.4p by yesterday afternoon.

Amigo said it remained a “highly profitable” business.

Hamish Paton, who became its chief executive in June, said: “New customers continue to choose Amigo as we provide a valuable product that improves their lives by giving them fair and transparent access to credit – to buy a car, to put down a rental deposit or to consolidate expensive debts. Our guarantor loan product occupies a space in society that is making a real difference to the lives of our customers, many of whom cannot access credit from their bank or building society.

“Amigo is both a responsible and profitable lender. We are focused on our future returns and building a sustainable business for the long term. We are accelerating investment in our operations to enable continued delivery of best in class customer service and further enhancing credit and conduct policies.

“This positive action means that we are hitting the ground running ahead of what we recognise is a changing regulatory and economic landscape. By doing this, we are being proactive and pragmatic. We are focussed on achieving the best customer outcomes – all with long-term returns as a key driver.”