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FSA feared a rise in Millfield cash deficit

Millfield Partnership Limited’s capital adequacy deficit would have risen to 7m by February 2007 if the FSA had not pulled the plug on the firm.

The regulator, in its final notice to MPL, said the firm failed to provide a viable proposal to rectify its 4.5m deficit and it was therefore forced to remove the firm’s permissions as the deficit was forecast to grow significantly.

MPL had repeatedly written to the FSA about its plans to try and reschedule loans but these plans fell through. It requested a short stay of execution to allow a sale of the business but was told that a proposed sale itself was not sufficient reason not to give the decision notice. The FSA also said it has serious concerns about the risk of consumer detriment if the firm’s permissions continued.

FSA head of department, enforcement division Jonathan Phelan says: “MPL reported a deficit as at February 28, 2006 of 4.5m. Its projections showed that unless it was able to reschedule loans and inject new capital, the deficit would continue to increase and peak at 7m in February 2007.”

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