Debt purchase firm signs redress deal with FCA

The FCA says 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.

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.

Following an FCA review, Motormile has since amended its processes, systems and controls to mitigate the risks identified.

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.

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.”