On 2nd November, the FCA announced that MotorMile Finance UK Ltd (MMF) had agreed to provide redress to more than 500,000 customers for “historic failings”:
The firm had inadequate systems and controls over due diligence. In particular, it failed to conduct sufficient due diligence upon the purchase of a debt portfolio to be satisfied that the sums due under customer loan agreements were correct. This in turn led to unfair and unsuitable customer contact for recovery of those sums.
MotorMile has said:
Customers do not need to take any action as the identified customer accounts have been placed in quarantine for several months throughout the process. MMF will contact affected customers by email in the coming weeks or they will receive a letter by post. The company plans to complete the redress scheme by February 2017.
What are these debts?
MMF mainly deals with car finance agreement and payday loan debts. The announcements don’t say exactly which debts are affected. It’s not clear:
- what the “quarantine” process referred to above means. Should affected customers have already have been told that there is some sort of hold on their debts?
- if the use of the word “historic” implies that the problems at MMF were a while ago and more recent debts they have acquired have been better handled.
It has been reported that MMF has bought debts from Peachy, Mr Lender, Lending Stream, WageDay Advance, Cash Genie, Swift Sterling and Pounds Till Payday. Many complaints about Motormile on internet forums seem to refer to payday loans – either saying the balances are wrong or that the debt has been repaid.
Credit file problems
These haven’t been specifically mentioned in the FCA or MMF statements. However it seems to have been common that MMF added a credit record for a debt with a recent default date, even when the actual default on the loan was several years ago. In some cases this is the only thing a customer is disputing. In others the customer also thinks the balance is wrong.
If MMF writes off a balance or gives you a refund, it may also delete the relevant credit record. That was the approach agreed with the FCA by Wonga, and a similar approach is now being used by the Financial Ombudsman when they are looking into payday loan affordability complaints.
What should you do?
If MMF have told you you will be getting some redress
Wait and see exactly how much this is and whether it includes correcting or deleting the relevant credit record. Complain if you don’t think it is adequate!
This redress will only relate to the debts that were passed to MMF, not any other loans from the same lender. If you had other payday loans, look at whether you can get a refund of payday loan interest. That link has a template letter you can use and hundreds of comments from people that have used these letters. If you borrowed or rolled loans repeatedly from a lender you may well have an excellent case.
If you haven’t heard anything from MMF yet
You may be contacted in the next few months. But you may decide not to wait and see, especially if you have been recently contacted by MMF so your loans may not fall into the “historic” group that will be given compensation automatically.
Instead you could do all of the following, which will put you in a better position if you don’t get compensation:
- ask MMF to supply a copy of your agreement under the Consumer Credit Act, together with a statement of your account from. There is a fact sheet about doing this here from National Debtline, which includes a template letter;
- see if the default date is correct on your credit records – this explains how to check your credit file. A default should have been added when your account was between 3 and 6 months in arrears. This would have been before the debt was sold to MMF. If the default date seems too late, ask MMF to correct this;
- check if any debts are statute barred because if they are, they are unenforceable if you don’t pay them – see Statute barred debt – common questions for more information; and
- consider putting in an affordability complaint to the payday lender, not MMF, saying that the loan outstanding (and any previous loans from that lender?) was unaffordable. Two articles to help you do this:
– for UK payday lenders, see Ask for a payday loan refund;
– there is a separate article for Swift Sterling and Pounds Till Payday as they are based in Malta. The reclaim process may be very prolonged, but get it kicked off!
If you do this, tell MMF that you have complained to the payday lender, that you dispute the balance owed as you consider you were given an unaffordable loan and ask MMF to put a hold on any enforcement action.
If MMF say you won’t get any compensation
It is still possible that MMF haven’t handled your case well. Or your debt could be unenforceable or that the default date is wrong. Or that the original loan was unaffordable. The rejection is just because you don’t fit within the types of cases that are being automatically refunded. So go through the four action points above and see if any of them can help you.