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Claims companies face crackdown - 19/02/2009
The Ministry of Justice is to crack down on businesses that mislead the public by claiming they can arrange for unpaid loans, credit card debts or other consumer debts to be written off.
The ministry has issued new guidance aimed at businesses offering claims management services for unenforceable agreements. The guidance highlights misleading statements in adverts making dubious claims or leaving out important information which might breach consumer protection regulations. Businesses making these statements could face enforcement action, which might ultimately result in authorisations being removed.
Justice minister Bridget Prentice said: "We have produced this guidance to protect innocent customers from being misled by businesses advertising easy and quick arrangements for outstanding loan, credit card and other similar debts to be written off and compensation to be obtained."
Ray Watson, Office of Fair Trading (OFT) director of consumer credit, added: "The OFT will not hesitate to take enforcement action against licensed claims management businesses who engage in unfair business practices by deliberately misleading vulnerable consumers about the services they offer. Businesses should also be aware that if they offer debt counselling or debt adjusting services without holding an appropriate licence, they will be committing a criminal offence and risk prosecution, and that any agreements they enter into with consumers whilst unlicensed may be unenforceable."
The action follows a consumer alert issued in August 2008 urging consumers to seek independent advice before accepting the services of businesses claiming that they can arrange for outstanding balances under loan, credit card and other consumer credit agreements to be written off and secure compensation.
Matthew Porteus, the managing director of claims management company Ratio Money, said it has been concerned about these issues for some time. "The statements being put out by some businesses, mainly new entrants to the market, are of concern to the legal industry as a whole and highlight why consumers should be wary about where they turn for support," he said.
Porteus added: "Our solicitors carry out comprehensive manual audits of our clients’ credit agreements. We find that eight of ten contain significant problems that could deem them unfair and in breach of the Consumer Credit Acts of 1974 and 2006. However, we always maintain that it is for the solicitors, and if needed the courts, to ultimately decide whether the agreement is unenforceable and whether the client is due for any recompense."
Claims companies face crackdown - 19/02/2009
The Ministry of Justice is to crack down on businesses that mislead the public by claiming they can arrange for unpaid loans, credit card debts or other consumer debts to be written off.
The ministry has issued new guidance aimed at businesses offering claims management services for unenforceable agreements. The guidance highlights misleading statements in adverts making dubious claims or leaving out important information which might breach consumer protection regulations. Businesses making these statements could face enforcement action, which might ultimately result in authorisations being removed.
Justice minister Bridget Prentice said: "We have produced this guidance to protect innocent customers from being misled by businesses advertising easy and quick arrangements for outstanding loan, credit card and other similar debts to be written off and compensation to be obtained."
Ray Watson, Office of Fair Trading (OFT) director of consumer credit, added: "The OFT will not hesitate to take enforcement action against licensed claims management businesses who engage in unfair business practices by deliberately misleading vulnerable consumers about the services they offer. Businesses should also be aware that if they offer debt counselling or debt adjusting services without holding an appropriate licence, they will be committing a criminal offence and risk prosecution, and that any agreements they enter into with consumers whilst unlicensed may be unenforceable."
The action follows a consumer alert issued in August 2008 urging consumers to seek independent advice before accepting the services of businesses claiming that they can arrange for outstanding balances under loan, credit card and other consumer credit agreements to be written off and secure compensation.
Matthew Porteus, the managing director of claims management company Ratio Money, said it has been concerned about these issues for some time. "The statements being put out by some businesses, mainly new entrants to the market, are of concern to the legal industry as a whole and highlight why consumers should be wary about where they turn for support," he said.
Porteus added: "Our solicitors carry out comprehensive manual audits of our clients’ credit agreements. We find that eight of ten contain significant problems that could deem them unfair and in breach of the Consumer Credit Acts of 1974 and 2006. However, we always maintain that it is for the solicitors, and if needed the courts, to ultimately decide whether the agreement is unenforceable and whether the client is due for any recompense."
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