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Payday lender loses its licence after OFT action
23/13 19 March 2013
Online payday lender, MCO Capital Limited ('MCO'), has had its consumer credit licence revoked by the OFT and from today is no longer permitted to make regulated loans to UK consumers.
Today's news follows the recent OFT payday lending review report, which uncovered evidence of widespread unfair business practices in the sector.
In August 2012, the OFT found that MCO had failed to put in place adequate identity checks for loan applicants. It is thought that this failure led to MCO being targeted by fraudsters who used the personal details of over 7,000 individuals to apply successfully for loans totalling millions of pounds.
The OFT also found that MCO had engaged in unfair business practices by writing to people who it was aware may not have taken out loans, asking unequivocally for repayment. MCO ignored OFT requests to stop this practice.
Additionally, the OFT found that MCO lacked the necessary skills, knowledge and experience to run a consumer credit business.
For all these reasons, the OFT decided to revoke MCO's consumer credit licence. MCO appealed the OFT's decision, but with effect from today withdrew its appeal. MCO is continuing to appeal the OFT's decision to impose a financial penalty of £544,505 for breaches of the Money Laundering Regulations 2007.
David Fisher, OFT Director of Credit, said:
'Removing MCO's licence is a timely reminder that payday and other lenders risk losing their licences if they engage in unfair business practices. The way MCO chased consumers for debts they did not owe was unacceptable and caused unnecessary distress to many people.'
Consumers who are pursued by a lender for a debt they do not owe should write to the lender and, where appropriate, the debt collection agency, making it clear why payment is being refused. Further information on what consumers can do is available in this Consumer Fact Sheet and Advice Guide, produced by the Credit Services Association.
NOTES
Payday lender loses its licence after OFT action
23/13 19 March 2013Online payday lender, MCO Capital Limited ('MCO'), has had its consumer credit licence revoked by the OFT and from today is no longer permitted to make regulated loans to UK consumers.
Today's news follows the recent OFT payday lending review report, which uncovered evidence of widespread unfair business practices in the sector.
In August 2012, the OFT found that MCO had failed to put in place adequate identity checks for loan applicants. It is thought that this failure led to MCO being targeted by fraudsters who used the personal details of over 7,000 individuals to apply successfully for loans totalling millions of pounds.
The OFT also found that MCO had engaged in unfair business practices by writing to people who it was aware may not have taken out loans, asking unequivocally for repayment. MCO ignored OFT requests to stop this practice.
Additionally, the OFT found that MCO lacked the necessary skills, knowledge and experience to run a consumer credit business.
For all these reasons, the OFT decided to revoke MCO's consumer credit licence. MCO appealed the OFT's decision, but with effect from today withdrew its appeal. MCO is continuing to appeal the OFT's decision to impose a financial penalty of £544,505 for breaches of the Money Laundering Regulations 2007.
David Fisher, OFT Director of Credit, said:
'Removing MCO's licence is a timely reminder that payday and other lenders risk losing their licences if they engage in unfair business practices. The way MCO chased consumers for debts they did not owe was unacceptable and caused unnecessary distress to many people.'
Consumers who are pursued by a lender for a debt they do not owe should write to the lender and, where appropriate, the debt collection agency, making it clear why payment is being refused. Further information on what consumers can do is available in this Consumer Fact Sheet and Advice Guide, produced by the Credit Services Association.
NOTES
- The Consumer Credit Act 1974 requires most businesses that lend money to consumers or offer goods or services on credit or engage in certain ancillary credit activities to be licensed by the OFT. A licence is not required to provide certain types of credit such as that to high net worth individuals in specified circumstances.
- The OFT has a statutory duty under the Consumer Credit Act 1974 to administer the consumer credit licensing regime, and must be satisfied that a licensee is fit to hold a consumer credit licence.
- Trading without a licence in such cases is a criminal offence and can result in a fine and/or imprisonment.
- The First-tier Tribunal (Consumer Credit) forms part of the General Regulatory Chamber of the First-tier Tribunal. It is administered by the Tribunals Service, an agency of the Ministry of Justice. The role of the First-tier Tribunal (Consumer Credit) is to hear and decide appeals against decisions of the Office of Fair Trading relating to: Licensing decisions of the Office of Fair Trading made under the Consumer Credit Act 1974, the imposition of requirements or a civil penalty on licensees under the Consumer Credit Act 1974 and the refusal to register, cancellation of registration, or imposition of a penalty under the Money Laundering Regulations 2007.
- See press release OFT revokes payday lender's licence and imposes penalty of over half a million pounds (9 August 2012) when the OFT originally announced the action against MCO.
- The findings of the OFT's review of the payday lending sector can be found in its final report.
