A debt collection firm has agreed to write-off £414m worth of claims after the Financial Conduct Authority (FCA) found systematic failures in the company's systems and controls.
Motormile Finance, which also trades as MMF, will write off debts that it had purchased from third parties owed by more than 500,000 customers.
Around 2,000 of these customers had started to pay money over to Motormile Finance and the FCA ordered the company to pay a total of £154,000 in compensation.
Similar to many other debt collection companies, Motormile purchased rafts of customer debts from third parties. Companies who do not want to expend time and resource chasing debts owed to them often sell them on at a fraction of the total amount outstanding.
The FCA found that Motormile had failed to check the details of the debts it purchased – in particular it did not ensure the sums outstanding were correct.
"This in turn led to unfair and unsuitable customer contact for recovery of those sums," the FCA said in a statement.
After an independent review, the watchdog said that Motormile has amended its processes, systems and controls to mitigate the risks identified.
In August 2016, the FCA re-authorised Motormile having been satisfied that the issues had been addressed, a new IT system was in place and a new chief executive, Denise Crossley, had been appointed to ensure standards are upheld.
“Working so closely with the FCA has provided Motormile 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.” said Crossley.
“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,” said Jonathan Davidson, a director of supervision at the FCA.