THE subprime lender Amigo has made a big loss despite attracting more than 200,000 new customers.

It came after a big rise in the cost of dealing with customer complaints.

The Bournemouth-based business revealed a pre-tax loss of £37.9million, compared with a £111m profit the year before, on revenue of £294 million.

In the financial year ending March 31, complaints cost the business £126.8m, compared with only around £100,000 in 2019.

The business has set aside a provision of £117.5m to handle complaints compared with no provision at all on March 31 2019.

Acting chairman Roger Lovering said: “We have seen a substantial increase in the volume of complaints and this has led us to make a significant provision, which resulted in an overall loss for the financial year.”

Amigo lends at 49.9 per cent APR (annual percentage rate) to borrowers with a friend or family member who will guarantee the loan.

Earlier this month, Amigo reached an agreement with the Financial Conduct Authority which gives it until October 30 to ensure that customers with complaints do not need to wait more than eight weeks before their claim is handled.

The lender failed to meet an initial June 26 deadline. It had a backlog of around 9,000 complaints at the time.

Meanwhile, the FCA has launched a probe into Amigo’s creditworthiness.

Last month a potential buyer walked away from a deal to take over the troubled subprime lender, just weeks after telling shareholders it would pay £100m for the business.

The unnamed bidder cited “the current market environment”.

Amigo’s board stressed yesterday it believes the company can keep going.

It said: “The board considers there to be adequate liquidity to continue to support the ongoing business activity.”

Mr Lovering said: “The last 12 months have been a challenging and difficult period, which is reflected in our results today.

“We are operating against an evolving regulatory picture, while facing economic uncertainty due to the Covid-19 pandemic.”

The company also announced that it had appointed Jonathan Roe to take over from Mr Lovering as the board’s chairman.

The veteran investment banker, who earned his stripes at Dresdner Kleinwort, has been chairman of Vanquis Bank for three-and-a-half years.

He said: “I do not underestimate the near-term challenges that Amigo is facing and fully recognise the uncertainties that many of our customers are currently facing too.”