Motormile Finance UK Limited (MMF) has entered into a substantial redress package with the Financial Conduct Authority (FCA), after it failed to conduct sufficient due diligence on the debts it purchased and ended up pursuing a large number of customers for incorrect debt amounts. The Leeds-based firm used the trading names MMF, MMF Debt Purchase and MMF UK; and its business involves purchasing payday loans and car finance loans from lenders.
Motormile will now write off some £414 million of debt, and will also make cash compensation payments of £154,000. More than 500,000 customers are said to be affected, of whom 2,148 will receive cash payments.
Affected customers will be contacted by Motormile in the coming weeks, and the redress process should be completed by February 2017.
The issues were identified during an FCA skilled persons review in 2015. Unlike many other credit firms subject to similar redress orders, the FCA has since granted full authorisation to Motormile. The regulator says it is satisfied that the firm has made major changes.
The firm’s profits fell from £3.7m last year to less than £500,000 this year as it made provision for the FCA redress order.
Jonathan Davidson, Director of Supervision – Retail and Authorisations at the FCA, said:
“We have agreed this package, and previous action, to protect the customers of Motormile from unfair practices. We have worked closely with Motormile, and are now satisfied with their progress and the way that they will address their previous mistakes. This evidences the importance of conducting sufficient due diligence and how failing to do so leads to poor treatment of customers.”
Denise Crossley, Chief Executive Officer at Motormile, said:
“Working so closely with the FCA has provided MMF with a very clear understanding of what is expected under the new regulatory regime and I can assure our customers that we have embraced this
“We apologise to all of the affected customers and will be addressing the issues through the redress scheme we have agreed with the FCA. MMF are now fully authorised by the FCA which is testament to them witnessing first-hand the serious approach we take to our regulatory responsibilities and our desire to treat customers fairly. We will strive to build on the excellent reputation we have in the market and continue to put customers first in everything we do.”
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