Debt advice firms in trouble again

Posted in 'Dealing with Debt' by Richard Catlin

17 June 2009

The Office of Fair Trading (OFT) has continued its crackdown on firms that claim – without substance - to be able to wipe out consumer debts, plus those found to be illegally “cold-calling” people struggling with debts.

Six debt management firms, together with a further four cold-calling companies were found to have misled consumers by failing to disclose the purpose for their call, or who they were. Many of those people to receive the calls were found to be registered with the Telephone Preference Service, which is designed to prevent cold-calls.

Despite assurances during the calls that they would be put through to a not-for-profit debt advisor, or that they had been “specially selected” as part of a Government scheme, consumers found that they were later asked for a fee by a commercial debt management firm.

The Citizens Advice Bureau and Information Commissioner’s Office both received complaints from people who had been contacted, and the OFT has subsequently warned those companies – which cannot be named – that they will face formal action if they fail to stop.

In a busy period for the OFT, their recent warnings to debt advice firms over misleading ‘wipe your debts’ advertisements have been backed up by the Advertising Standards Authority (ASA), who have ruled that an advert for a website service was misleading.

As well as not being able to back up claims over the percentage of cases that it expected to be able to win, the firm in question was also criticised for failing to make it clear that there would be a fee involved for their services.

Despite the overblown claims in their advertisements, and up-front fees of around £500, these debt advice firms have very little chance of having debts successfully wiped out. The fees, of course, are non-refundable.

Anyone who is worried about debt can get free, impartial advice by visiting the Debt Advice Centre on checkmyfile, as well as checking their credit score and rating, plus finding out how their own, or any UK postcode rates – again all for free.