The Office of Fair Trading (OFT) has fined online payday lender MCO Capital Limited £544,505 and revoked its consumer credit licence.
MCO breached money laundering regulations and failed to adequately verify the identities of loan applicants.
This led to MCO being targeted by fraudsters who used the personal details of over 7,000 individuals to successfully apply for loans amounting to millions of pounds.
The Money Laundering Regulations 2007 require lenders to conduct appropriate identity checks and are designed to reduce the risks of businesses being used for money laundering and terrorist financing.
The OFT found that MCO had also engaged in unfair business practices by writing to people, who they were aware may not have taken out loans, asking for repayment. MCO ignored the OFT’s requests to stop this practice.
Additionally, MCO was found to lack the necessary skills, knowledge and experience to run a consumer credit business.
David Fisher, OFT director of credit, said: “MCO’s failure to put adequate procedures in place made it vulnerable to fraud. The way in which MCO then wrote to consumers to collect debts caused unnecessary distress and inconvenience to thousands of people.
“This financial penalty sends out a strong message that businesses lending to consumers must have adequate anti-money laundering procedures in place.”
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 a leaflet produced by the Credit Services Association.
