The Financial Conduct Authority (FCA) has announced that Motormile Finance, a debt purchasing and collections company, has agreed to write-off £414m of debt for over 500,000 of its customers for past failures in its collections process.
The redress will consist of £154,000 in cash payments to customers and the writing-off of £414m of debt where the firm’s been unable to provide evidence that the balance of a debt is correct and properly due to be repaid.
Bradford-based Motormile Finance are also known as MMF, MMF Debt Purchase and MMF UK.
The FCA investigation found that the Motormile Finance had inadequate systems, and didn’t conduct the required checks when buying a portfolio of debts (commonly known as ‘debt books’) from creditors. This process, known as due diligence, meant that the firm couldn’t always be sure that the balance of some customers’ debts were correct.
Other poor practices were also found at the firm, and the company are reported to be making improvements to their processes to make sure this doesn’t happen again.
What’s Motormile Finance going to do about it?
Affected customers will receive either a cash refund, have their outstanding debt balances written off, or in some situations both. The redress will consist of £154,000 in cash payments to customers, and £414m will be used to write off debt balances.
The FCA have since authorised Motormile Finance to continue trading, after it was satisfied that the poor practices at the firm were historical, and major changes have since been made.
A spokesperson for 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.”
I’m a Motormile customer, what should I do?
If you’re affected, you don’t need to take any action. Motormile Finance will contact you to explain how the refund will be dealt with. They’ll be in touch by February 2017 at the latest.
There’s more information for customers who think they’re affected on the Motormile website.
I’m a StepChange Debt Charity client – what do I need to do?
If you’re on a debt solution with us and you’re told you’ll receive money or have your balance reduced or written off, you should get in touch with us to let us know. We’ll see if this affects your solution, and let you know if you need to do anything.