The Office of Fair Trading has suspended the consumer credit licence of a payday lender for the first time.
The OFT has suspended the licence of London-based online payday lender Micro Lend, saying this was a necessary step to protect consumers.
It means it is now a criminal offence for Micro Lend, or any other person, to engage in any consumer credit or credit broking activity using the company’s credit licence.
An amendment to the Consumer Credit Act which came into effect in February 2013 gave the OFT the power to suspend a consumer credit licence where it appears urgently necessary to do so for the protection of consumers.
The OFT says it cannot discuss detailed reasons for the suspension at this stage.
Micro Lend has been invited to make representations to the OFT by 24 March. If representations are made, the OFT’s adjudicator will decide whether to confirm the suspension or withdraw it.
The FCA will take over regulation of consumer credit from the OFT on 1 April.
Yellowtail Financial Planning managing director Dennis Hall says: “It is good to see the OFT taking strong action against a payday lender as there has been a lack of regulatory action in this area in the past.”