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Debt purchase firm Motormile to compensate 500,000 customers

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
02/11/2016

Motormile Finance UK, a debt purchase and collections firm, has agreed to redress over 500,000 customers for historic due diligence and collections failures.

After an agreement with the regulator, the firm is compensating customers for buying a debt portfolio without checking the outstanding loan sums it had bought were correct. This in turn led to unfair and unsuitable customer contacts to recover the sums.

The redress will consist of £154,000 in cash payments to customers and £414m of written-off debt because the firm was unable to evidence the outstanding debt balance.

In February 2015, the Financial Conduct Authority (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 were historical, with major changes also implemented by the firm, including a bespoke new IT system and the appointment of a new chief executive officer, to ensure compliant standards are maintained.

Customers do not need to take any action, and MMF will contact affected customers by February 2017. MMF have set up a dedicated page on their website to provide further information to customers here.