Debt company watchdog clamps down on misleading ads that may leave Brits worse off

DEBT companies with misleading adverts that could leave struggling Brits worse off could soon face being fined or losing their licence.

New guidance issued today is calling for insolvency practitioners – people who help hard-up Brits manage their debts – to be more responsible for adverts about their services.

This includes avoiding making unsubstantiated claims about how much debt can be written off, using the word accredited or using similar names to charities in ads.

The guidance was issued today by debt company regulator The Insolvency Service.

It comes after the Advertising Standards Authority last month banned “misleading” ads for two debt companies offering the individual voluntary arrangements (IVAs).

An investigation by The Sun has also found copycat debt firms, which have similar names to free charities, pay to appear at the top of search engines.

How to get debt help for free

THERE are lots of groups who can help you with your problem debts.

  • Citizens Advice – 0808 800 9060
  • StepChange – 0800 138 1111
  • National Debtline – 0808 808 4000
  • Debt Advice Foundation – 0800 043 4050

You can also find information about Debt Management Plans (DMP) and Individual Voluntary Arrangements (IVA) on the Money Advice Service website and on the Government's Gov.uk site.

Speak to one of these organisations – don't be tempted to use a claims management firm that will claim it can write-off lots of your debts in return for a large up-front fee.

In its update today, The Insolvency Service warned that some adverts make "unbalanced statements" about the merits of an individual voluntary arrangement (IVA) as opposed to a bankruptcy or another debt solution.

This is a concern raised by the Financial Conduct Authority earlier this week, which declared that the IVA market is broken due to "harmful" fee structures.

The Insolvency Service said: "All of these actions are liable to mislead consumers into applying/enquiring about the services that are being offered and this could mean that consumers in debt could ultimately end up in a solution without receiving appropriate advice.

"Advertising of this nature has appeared in a range of forms, including using one click websites, social media adverts and through the use of social media influencers and competitions."

All insolvency practitioners have to be registered with a recognised professional body (RPB) such as the Association of Chartered Certified Accountants.

The Insolvency Service has said the RPBs should monitor adverts used by members as well as their relationships with introducers and lead generators that may arrange the posts.

Where there are concerns, The Insolvency Service said, the RPB should investigate why an IVA was proposed and what advice was provided.

If the RPB is not satisfied with the response, the Insolvency Service said regulatory action may be appropriate against the practitioner and the individual or firm acting as the introducer reported to the FCA.

RPBS have powers to fine members and they can restrict or remove their permissions to trade as insolvency practitioners.

The Insolvency Service said: "Ensuring that insolvency practitioners take responsibility for the journey that the consumer has been on, before they reach the practitioner, is important.

"With better communications between the relevant regulators, we should be able to focus efforts on raising the quality of debt advice, reducing instances of poor advertising practices, and inappropriate IVAs."

Debt charities such as StepChange and National Debtline have long-campaigned about misleading ads that lure people into unsuitable products.

Richard Lane, director of external affairs at StepChange, said: "This new guidance, with more stringent monitoring and better co-ordination between regulators, is obviously very welcome.

"However, even under the new guidance there’s a risk that the approach could be one of shutting the stable door after the horse has bolted, as it remains largely reactive, dealing with poor practice after the event."

He said explicit statutory regulation was needed to prevent misleading lead generation advertising in the first place.

The Financial Conduct Authority has announced that the home repossession ban will continue until April but bailiffs will be able to seize goods and cars.

See how you can apply for a mortgage payment holiday.

A ban on bailiff evictions due to end on January 11 has been pushed back until at least February 21.

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