Since the regulator started an independent review of Motormile in early 2015, the company has overhauled its IT systems and hired a new chief executive.
“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, director of supervision for retail and authorisations at the FCA.
“This evidences the importance of conducting sufficient due diligence and how failing to do so leads to poor treatment of customers.”
The FCA took over responsibility for 50,000 consumer credit firms in 2014 and has been vetting providers before giving them permission to operate, starting with the payday lenders.
The regulator refused permission to 35 loan firms in the last financial year and more than 100 debt management firms left the industry. The number of short-term loans has dropped from 6.3m in the first six months of 2013 to just 1.8m in the first half of 2015, aided by a new cap on fees and penalty charges.
Around 400,000 Britons are still on debt management plans after struggling to pay back their original loan.
Motormile Finance UK (MMF) reported that profits fell from £3.7m to less than £500,000 last year as it started to make provisions for the FCA’s intervention.
“Working so closely with the FCA has provided MMF 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 Denise Crossley, chief executive. “We apologise to all of the affected customers and will be addressing the issues through the redress scheme we have agreed with the FCA.”
She added that the group is now fully authorised by the regulator, “which is testament to them witnessing first-hand the serious approach we take to our regulatory responsibilities and our desire to treat customers fairly”.
Customers do not need to take any action and will be contacted in the coming weeks. Motormile hopes to complete the compensation programme by February.