OFT strip payday lender of licenceMarch 20th, 2013 • 3 Comments
The OFT have taken away the licence of a payday lender for the first time as they crack down on people getting stung when they’re broke.
MCO Capital, who operated under online names Help Loan and Balance Loan, have been banned after systematically failing to carry out identity checks and didn’t have nearly enough knowledge needed to run a consumer credit business, according to the Office of Fair Trading.
OFT officials said that MCO acted unfairly and caused “unnecessary distress” by writing to people to chase the debts, even though it knew they might not have borrowed any money.
Last August, the OFT took action against MCO, hitting them with a £544,505 penalty and revoked their consumer credit licence. Yesterday, MCO dropped an appeal against this move, making it the first time a payday lender has been squashed by the OFT’s new crackdown.
A statement issued by MCO Capital said: “Following discussions with the Office of Fair Trading, MCO Capital has decided to relinquish its consumer credit licence. There remains the issue of the significant historic debt that remains to be recovered and consideration is being given to the most appropriate way of dealing with this matter.”
The watchdog is continuing to gun for the payday sector after finding evidence of “widespread irresponsible lending” and have given the top 50 payday loan companies 3 months to prove that they’re trading fairly.
So how exactly do the borrowers pay back the money ? If it’s short term loans with 4000% APR then they will have a huge debt by the time the OFT sort this out surely?
Just because they lost their license, doesn’t mean they aren’t still due the money back with interest, as per the loan contracts.
They can’t write it off either, as we all know from the Northern Rock fiasco.
i agree @wow, but people were daft enough to agree to the astronomical prices + will no doubt these businesses will hound people for the money or sell the debt on to the bailiffs…increasing peoples debts, some of them whom are on state benefits!!!
Wow, no one said it doesn’t have to be paid back.
The debt will most likely be purchased by another company.