Amigo Loans has been told it cannot make any dividend or bonus payments without the UK regulator’s permission in the latest blow to the subprime borrowing business following months of management upheaval.

On Monday, Amigo announced it had entered into an “asset voluntary requirement” with the Financial Conduct Authority — a supervisory measure that means it will need prior approval by the regulator to transfer assets “in certain circumstances”. These transfers include discretionary cash payments to its directors and dividends to shareholders.

Shares in Amigo Holdings fell 20 per cent after the announcement before recovering to 7 per cent down by mid-morning on Monday.

Amigo said the new requirement “does not impact the day-to-day running” of the business, or its ability to continue to pay down debt. It also stressed it had “adequate liquidity to continue to fund operations and support its customers”.

However, the company acknowledged that the increased regulatory scrutiny followed a high-profile battle for control of the business between its previous board and founder James Benamor. Mr Benamor had attempted to return to run the group, claiming its management had mishandled a rise in complaints and failed to stand up to the regulator in the past.

Last month, he tried to rejoin the board before installing himself as group chief executive, but 57 per cent of votes cast at a shareholder meeting rejected his proposal.

On Monday, Amigo noted it now “has a new board in place and is in regular and productive dialogue with the FCA to restore confidence following the events of recent months”.

It added: “The board continues to be focused on addressing Amigo’s legacy issues, restoring confidence in its corporate governance and building a sustainable business for the long term.”

One person briefed on the regulator’s action suggested it may have been taken as a precaution in case Mr Benamor took control of the group and made changes to its financial structure, but it would not affect the new management’s plans.

Mr Benamor had suggested returning cash from Amigo’s UK regulated lending business to allow its parent group to build new businesses outside the remit of the FCA.

However, the company’s new management had already indicated it would not pay dividends or make other asset transfers, and the person briefed on the FCA’s move said it “doesn’t change any of their plans”.

John Cronin, analyst at Goodbody, said: “While this morning’s announcement is clearly unhelpful for sentiment . . . the Asset VReq will have a negligible impact on the day-to-day running of the business.”

According the FCA’s guidelines on supervision of financial companies, a VReq may be used “in instances where we have evidence that firms are not meeting our standards”. Its aim is to “prevent ongoing harm to consumers or markets”.

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