More than 500,000 people have had their payday and car finance loans written off after the main City watchdog stepped in to protect them from “unfair practices” by a debt collection firm.

These individuals became customers of debt purchase and collections firm Motormile Finance UK, which has agreed to write off £414m of debt after the Financial Conduct Authority (FCA) criticised the way it was pursuing people for the sums it said they owed.



Motormile, which also trades as MMF, MMF Debt Purchase and MMF UK, describes itself as “one of the leading debt purchase companies in the UK,” and specialises in buying up old payday loans and other debts, and then attempting to recover this money.



According to consumer website forums, the company has bought payday loans from a number of lenders including Cash Genie, Peachy, Mr Lender, Lending Stream, Swift Sterling, WageDayAdvance and PoundsTillPayday.co.uk. It is also understood to have bought car finance loans.



The FCA said that after buying debts, the company failed to carry out the necessary “due diligence” to make sure the sums of money that were said to be owed were correct. It added: “This in turn led to unfair and unsuitable customer contact for recovery of those sums.”



A redress programme has now been set up, affecting more than 500,000 people. The vast majority – who typically received a letter or email saying that the debt had been passed to Motormile – will see their debts written off. Typically the debt will run into several hundred pounds per person.



In cases where the affected customers had started making payments to Motormile, it will be repaid to them. A total of £154,000 is being repaid to 2,148 people, which averages about £72 per person.



Forums on websites such as MoneySavingExpert and the Consumer Action Group feature a number of posts relating to Motormile and its methods. Many site users have pasted copies of emails they said they had received from the company, some of which talk about how “a doorstep collection agent will shortly be instructed to attend your property”. Some claim they have had default notices placed on their credit files.

Jonathan Davidson, director of supervision for 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.”



In August 2016 the FCA authorised the firm after being satisfied that the poor practices were “historical”, and major changes had been made.



Denise Crossley, chief executive officer at Motormile, said: “We apologise to all affected customers and are delighted that we are able to address the issues through the redress scheme we have agreed with the FCA. MMF are now fully authorised by the FCA, which is testament to them witnessing first-hand the serious approach we take to our regulatory responsibilities and our desire to treat customers fairly.

“We will strive to build on the excellent reputation we have in the market and continue to put customers first in everything we do.”

Customers do not need to take any action, as Motormile will contact those affected by February 2017. The company has set up a dedicated page on its website providing further information.

