MCO Capital Limited made loans in the name of 7,000 people whose identity was used by fraudsters without their permission or knowledge. The loans totalled millions of pounds and demonstrated MCO's inability to put in place adequate identity checks for loan applicants. Money laundering laws require lenders to conduct identity checks
The OFT revoked MCO's consumer credit licence in August and imposed a penalty of £544,505 on the company. MCO appealed and continued to trade while the appeal was pending but has now withdrawn its appeal. It will continue to appeal against the penalty.
The company, which operated using brands including Speedcredit and Paycheckcredit, also engaged in unfair business practices by demanding money from the real identity holders who had not taken out loans.
"[It wrote] to people who it was aware may not have taken out loans, asking unequivocally for repayment. MCO ignored OFT requests to stop this practice," said an OFT statement.
'Removing MCO's licence is a timely reminder that payday and other lenders risk losing their licences if they engage in unfair business practices," said David Fisher, OFT director of credit "The way MCO chased consumers for debts they did not owe was unacceptable and caused unnecessary distress to many people."
The OFT said that MCO's inability to operate the correct identity checks attracted fraudsters to it.
Citizens Advice chief executive Gillian Guy welcomed the action. "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," she said, calling it a victory for consumers.