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Solicitors warned about firms that mislead the public about chances of getting debts written off
21 April 2009
Solicitors are being warned not to accept business from introducers which mislead consumers about the prospect of getting loans, credit card and other debts written off.
The Solicitors Regulation Authority (SRA) is issuing the warning following a rash of misleading statements in adverts, especially on the internet, making dubious claims or leaving out important information which might breach consumer protection regulations.
Some of these adverts wrongly suggest that almost all loan or credit card agreements in place before April 2007 are unenforceable under the Consumer Credit Act and can therefore be written off.
SRA Chief Executive Antony Townsend said, "These ads appear to offer an easy way out of difficulty to people who have debts they are struggling to pay. But many credit agreements do meet the legal requirements and, therefore, can't easily be challenged as unenforceable."
"We've noticed a sharp increase in the number of solicitors getting involved in this activity since last autumn. The SRA is currently investigating 10 firms. Any that are found to have breached Rule 1—the core principles—of the Code of Conduct may face the Solicitors Disciplinary Tribunal."
The SRA is liaising closely with the Claims Management Regulation Monitoring and Compliance Unit at the Ministry of Justice, which regulates introducers. The Head of Claims Management Regulation at the Ministry of Justice, Kevin Rousell, said: "We won't tolerate claims management businesses that set out to mislead consumers and will do our utmost to make the regulatory regime a hostile one for those not willing to follow the rules. Action against solicitors that aren't complying with their Code of Conduct is also essential to ensure regulation is working effectively from both ends and that solicitors do their due diligence, including when dealing directly with consumers."
Citizens Advice has warned that the claims handlers often charge about £500 upfront to check a credit agreement, even though there is no guarantee of success. Where people have several debts, the fees can mount up to several thousands of pounds. People may then be sold a "no win, no fee" agreement to take legal action that can cost them even more.
The SRA advises solicitors to check the advertising of the claims introducers they are dealing with or are approached by. They should avoid accepting business from introducers that make claims like the following:
Antony Townsend warns: "Dealing with firms which con consumers who are already in debt in that way is indefensible, and would be unacceptable to all conscientious solicitors."
Solicitors Regulation Authority - News releases
21 April 2009
Solicitors are being warned not to accept business from introducers which mislead consumers about the prospect of getting loans, credit card and other debts written off.
The Solicitors Regulation Authority (SRA) is issuing the warning following a rash of misleading statements in adverts, especially on the internet, making dubious claims or leaving out important information which might breach consumer protection regulations.
Some of these adverts wrongly suggest that almost all loan or credit card agreements in place before April 2007 are unenforceable under the Consumer Credit Act and can therefore be written off.
SRA Chief Executive Antony Townsend said, "These ads appear to offer an easy way out of difficulty to people who have debts they are struggling to pay. But many credit agreements do meet the legal requirements and, therefore, can't easily be challenged as unenforceable."
"We've noticed a sharp increase in the number of solicitors getting involved in this activity since last autumn. The SRA is currently investigating 10 firms. Any that are found to have breached Rule 1—the core principles—of the Code of Conduct may face the Solicitors Disciplinary Tribunal."
The SRA is liaising closely with the Claims Management Regulation Monitoring and Compliance Unit at the Ministry of Justice, which regulates introducers. The Head of Claims Management Regulation at the Ministry of Justice, Kevin Rousell, said: "We won't tolerate claims management businesses that set out to mislead consumers and will do our utmost to make the regulatory regime a hostile one for those not willing to follow the rules. Action against solicitors that aren't complying with their Code of Conduct is also essential to ensure regulation is working effectively from both ends and that solicitors do their due diligence, including when dealing directly with consumers."
Citizens Advice has warned that the claims handlers often charge about £500 upfront to check a credit agreement, even though there is no guarantee of success. Where people have several debts, the fees can mount up to several thousands of pounds. People may then be sold a "no win, no fee" agreement to take legal action that can cost them even more.
The SRA advises solicitors to check the advertising of the claims introducers they are dealing with or are approached by. They should avoid accepting business from introducers that make claims like the following:
- "Eighty per cent of credit agreements are unenforceable."
- "Fifty million credit agreements are created every year—at least 25 million are unenforceable."
- "We'll get your credit cards written off within six weeks!" "Fast results guaranteed!"
- "We have a 100 per cent success rate."
- "A positive outcome is guaranteed."
- "We can write off all your outstanding debt, all previous payments could be returned, and you could keep any goods purchased."
Antony Townsend warns: "Dealing with firms which con consumers who are already in debt in that way is indefensible, and would be unacceptable to all conscientious solicitors."
Solicitors Regulation Authority - News releases
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