Payday lender MCO Capital Limited has had its consumer credit licence revoked by the Office of Fair Trading (OFT) and is no longer permitted to make loans to UK consumers from today.
It 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.
MCO appealed the OFT’s decision, but with effect from today (19 March 2013) it 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, director of credit at the OFT, said that removing MCO’s licence was a timely reminder that payday and other lenders risk losing their licences if they engage in unfair business practices.
He added: “The way MCO chased consumers for debts they did not owe was unacceptable and caused unnecessary distress to many people.”
Gillian Guy, chief executive of Citizens Advice, said: “It is a victory for consumers that this payday lender has been forced to stop trading today. Citizens Advice has helped lots of people who were caused significant distress at the hands of MCO Capital Limited’s unfair practices, including those who were chased for loans they never even had.
“We provided evidence to the OFT when it launched its investigation last year and continued to see problems with the lender, so we are pleased they have taken action today.”