Unenforceable debt claims company under fire from BBC

Posted in 'Dealing with Debt' by Richard Catlin

18 February 2010

Another claims management company is under fire and facing censure after a BBC investigation found that staff deliberately misled consumers, potentially damaging their credit ratings at the same time.

Radio 4’s Money Box programme reported that in addition to making unjustified claims about the chances of success in avoiding ‘unenforceable’ debts, the general advice given by Beneficial Claims to consumers was misleading and potentially damaging.

The recent ‘test case’ rulings in unenforceable debt claims don’t seem to have entirely dampened the enthusiasm of some claims management companies who continue to make overblown claims about being able to get consumers' debts written off.

The test cases established some important precedents – firstly that lenders can continue to report the overdue statuses of accounts to credit reference agencies when an account is in dispute - and also that lenders are only obliged to produce a ‘true copy’ of the Consumer Credit Agreement, rather than the original.

It had been expected that the decisions in the test cases would stop many claims in their tracks, but with some grey areas remaining unresolved, and with consumers prepared to part with fees of up to £500, many claim companies continue to hold out that they will meet with success, even though the tide of legal opinion appears to be going in the other direction.

The Ministry of Justice has already clamped down hard on a number of claims management firms found to be operating outside of its guidelines – going as far as suspending or de-authorising over 100.

During the Money Box investigation, a member of Beneficial Claims staff boasted of a "93% success rate", despite later admitting that this figure only related to the number of agreements it believed could be challenged in court, rather than the amount written off. For Beneficial Claims, only a handful of claims have been successful to date across all cases.

Beneficial Claims was also criticised by the programme for claiming that there is no risk to a consumer’s credit rating by using their services. Again, the ruling by a High Court Judge in October 2009 contradicts this, and established that lenders are well within their rights to report late or non-payment of debt, even whilst an account is being disputed.

As such, anyone choosing to stop making repayments on any debt involved in a dispute could see their credit rating severely impaired.

You can check what your own credit report looks like on checkmyfile – the only place where you can see reports based on all three UK credit reference agencies together in the same easy-to-understand format. Access starts from as little as £4.99 a month.

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