StepChange Debt Charity welcomes OFT action to revoke payday lender’s consumer credit licence

19 March, 2013

StepChange Debt Charity has welcomed today’s announcement from the Office of Fair Trading (OFT) to revoke the consumer credit licence of payday lender MCO Capital Limited. The charity has raised a number of concerns regarding poor practice in the payday lending sector and believes that this robust action by the OFT sends a strong message to other firms that regulators will take action if they fail to clean up their act.

StepChange Debt Charity has highlighted serious problems that exist within the payday loan sector:

• Rising balances - the average balance of those with payday loan debts coming to StepChange Debt Charity is now £1,657, up from £1,138 in 2009. 
• Multiple payday debts – last year, the charity helped 7,221 people with five or more payday loans, this number stood at just 716 in 2009.
• Misuse of Continuous Payment Authority (CPA) – the charity often sees funds withdrawn from consumer’s accounts without consent.
• Aggressive collection practices – StepChange Debt Charity regularly sees consumers subjected to threatening and harassing telephone calls and lenders misrepresenting their legal powers.

StepChange Debt Charity’s director of external affairs Delroy Corinaldi said: “Today’s proactive and robust action taken by the OFT is good news for consumers, who for too long have been subjected to poor practices by elements of the payday lending sector.

“Payday lenders and their trade bodies must now prove they are serious about addressing the deep and systemic problems that exist within the sector, and not leave consumers in a spiral of indebtedness.

“We welcome the positive action taken by the OFT in recent weeks. It is essential that in the next year, ahead of consumer credit moving to the Financial Conduct Authority (FCA), the OFT has sufficient resources to continue its crucial work in protecting consumers from the worst elements of the payday loan industry.”