Debt purchase and collections company Motormile Finance UK has agreed to provide redress to more than 500,000 customers by writing off £414 million of debt and making repayments of £154,000 for historic failings in its due diligence and collections process.
The repayment is part of an agreement with the Financial Conduct Authority (FCA), which had found Motormile Finance UK to have inadequate systems and controls over its due diligence process.
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 (link is external).
Motormile Finance UK, which also trades as MMF, MMF Debt Purchase and MMF UK, collects debt on behalf of creditors and specialises in buying short-term loans.
The FCA says the Leeds-based firm “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 led to “unfair and unsuitable” outcomes for its customers.
The redress will consist of £154,000 in cash payments to 2,148 customers and the writing off of £414 million of debt where the firm has been unable to prove the outstanding debt balance is correct and properly due.
In February 2015 the FCA appointed a ‘skilled person’ to conduct a review of Motormile’s existing loan portfolios and collections processes, including its due diligence. The company has since changed its processes, systems and controls to lessen the risks identified.
In August this year, the FCA authorised Motormile after having been satisfied its poor practices were in the past and major changes had been made by the firm. These included a bespoke new IT system and the appointment of a new chief executive.