Motormile Finance UK Limited, a debt purchase and collections firm, has entered into an agreement with the Financial Conduct Authority (FCA) to provide redress to more than 500,000 customers for historic failures in its due diligence and collections process.
The firm had inadequate systems and controls over due diligence. In particular, it failed to conduct sufficient due diligence upon the purchase of a debt portfolio to be satisfied that the sums due under customer loan agreements were correct. This in turn led to unfair and unsuitable customer contact for recovery of those sums.
The redress will consist of £154,000 in cash payments to customers and the writing-off of £414m of debt where the firm has been unable to evidence the outstanding debt balance is correct and properly due.
Additionally, in February 2015, the FCA appointed a skilled person to conduct a review of Motormile’s (which also trades as MMF, MMF Debt Purchase and MMF UK) existing loan portfolios and collections processes, including its due diligence. Motormile has since amended its processes, systems and controls to mitigate the risks identified.
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.”
In August 2016, the FCA authorised the firm after being satisfied that the poor practices seen at MMF are historical and major changes have been implemented by the firm including a bespoke new IT system and the appointment of a new Chief Executive Officer, which should be sufficient to ensure compliant standards are maintained.
Customers do not need to take any action, MMF will contact affected customers by February 2017. MMF have set up a dedicated page on their website to provide further information to customers: http://www.mmile.com/RedressProgramme.aspx[1].
Notes to editors
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA[2].