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Payday lender fined over half a million pounds for lax security
Online payday lender MCO has also had its consumer credit licence revoked for unfair business practices.
Online payday lender MCO Capital has been fined a record £544,505 after its inadequate business practices left the company vulnerable to fraud.
MCO, which traded as 'Help Loan', has also become the first payday lender to have its consumer credit licence revoked for unfair lending practices.
MCO’s failure to conduct appropriate identity checks led to it being targeted by fraudsters, who used the personal details of more than 7,000 individuals to successfully apply for loans amounting to millions of pounds, the Office of Fair Trading (OFT) revealed today.
Regulations are in place to reduce the risks of businesses being used for money laundering and terrorist financing, the OFT explained. By breaching these regulations MCO left the company vulnerable to fraud.
The OFT also found MCO guilty of engaging in unfair business practices by writing to people it knew may not have taken out loans and asking them unequivocally for repayment.
MCO then ignored the OFT’s requests to stop this practice, 'causing unnecessary distress and inconvenience to thousands of people,’ the OFT’s director of credit David Fisher added.
‘Additionally, MCO was found to lack the necessary skills, knowledge and experience to run a consumer credit business,’ said the OFT. ‘All of these failures justify the revocation of MCO’s consumer credit licence.’
MCO now has the right to appeal against the OFT’s decisions.
Fisher, however, said: ‘This financial penalty sends out a strong message that businesses lending to consumers must have adequate anti-money laundering procedures in place.’
A new customer charter designed to improve the reputation of payday lenders and increase protection for customers announced last month, meanwhile, has been criticised by consumer groups for not going far enough to improve the poorly regulated sector.
According to Which?, a fifth of people who take out payday loans are unable to repay them and are left trapped in a downward spiral of debt thanks to hidden charges and high fees.
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