David Williams welcomes crackdown on debt scams

David Williams, Labour's Parliamentary Candidate for Crewe and Nantwich has welcomed action by the Labour Government to clamp down on businesses which are exploiting people in financial difficulty by making misleading claims about arranging for debts to be written off.

Labour’s Ministry of Justice has produced new guidance aimed at firms who deal in debt advice and counselling. They have been warned that if their adverts make dubious claims or leave out important information which might breach consumer protection regulations, they could face enforcement action that might ultimately result in authorisations being removed.

Supporting this action, David Williams said:

“Vulnerable people in Crewe and Nantwich facing debt problems need help and support. I am pleased that Labour is cracking down on businesses who falsely claim they can write off debt. The new guidance which the Government is producing will protect innocent customers from being misled by irresponsible firms.”

“We urge anyone in who is considering using a business offering debt help to think carefully before entering an arrangement and seek independent advice before making any final decisions. Our new guidance is also an important reminder to local businesses about the need to comply with rules on advertising and marketing and provide an effective service to their customers.”

Rules

Authorised businesses have to follow strict rules which govern the way they conduct their activities, including advertising and selling:

- They must not ‘cold call’ in person or engage in any form of high pressure selling;

- They must give written information on how to pursue a claim and the costs involved before a contract is agreed;

- They must allow a ‘cooling off’ period of at least 14 days after signing a contract in case the consumer changes their mind;

- They must operate a customer complaints scheme that meets relevant criteria.

Concerns

The Governemt has recently become aware of a problem whereby certain companies specialising in debt advice and counselling have been making misleading advertising statements. These statements include:

Scale of unenforceability market “80% of credit agreements are unenforceable”; “50 million credit agreements are created every year, at least 25 million are unenforceable”.

Volume of cases handled “We are currently handling over 5,000 cases!”; “We are currently managing £30m of claims!”

Timescales “We’ll get your credit cards written off within 6 weeks!”; “Fast results guaranteed!”

Success rates “We have a 100% success rate”; “A positive outcome is guaranteed”

Potential outcomes “We can write off all your outstanding debt, all previous payments could be returned, and you could keep any goods purchased.”

Affect on consumer's credit rating “Making a claim will not affect your credit rating or your ability to get credit in future”

Unqualified use of “No win, no fee”-type statements “It is FREE to claim”; “It costs nothing to claim – what do you have to lose?”

Testimonials “Fantastic service!”; “Wow, what a brilliant service, thank you very much!!”

Please click here to vitist the Citizens' Advice Bureau debt advice website