MoJ warns consumers over misleading claims

[Amethyst]

CONSUMER ALERT


CLAIMS REGULATOR AND OFT WARN CONSUMERS ABOUT RISKS OF BEING MISLED OVER THE ENFORCEABILITY OF CONSUMER CREDIT AGREEMEMTS

The Claims Management Regulator at the Ministry of Justice and the Office or Fair Trading (OFT) are warning consumers to think carefully before responding to 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.

Consumers are advised to seek independent advice before using the services of businesses that offer to find ways to render consumer credit agreements unenforceable. Businesses can only provide claims services if they are authorised and regulated by the MOJ under the Compensation Act 2006. Such businesses may also need to hold an appropriate OFT consumer credit licence.

Consumers may be asked to pay large up-front fees, often up to £500, for the businesses to review their credit agreements. Some businesses are claiming that many of these agreements are completely unenforceable, that consumers can have debts cancelled and claim back thousands of pounds. Consumers should think very carefully before committing themselves to making claims and handing over hundreds of pounds in advance to do so, even where refunds may be promised if the claim is unsuccessful.

Consumers with specific debt problems may wish to contact their local Citizens Advice Bureau who will often be able to provide advice free of charge. Free, impartial advice can also be obtained from the contacts at the end of this alert.

[Amethyst]

Re: MoJ warns consumers over misleading claims

NOTES

Claims management regulation
1.The Ministry for Justice (MoJ) is the Claims Management Regulator in England and Wales. Ministry of Justice checks a wide range of information about businesses before authorising them; monitors the services the business provides; will take action against businesses that breach the rules, which could include suspension or cancellation of authorisation.
2.Authorised businesses have to follow strict conduct rules. They must not ‘cold call’ in person, or engage in any form of high pressure selling; give written information on how to pursue a claim and the costs involved before a contract is agreed; allow a ‘cooling off’ period of at least 14 days after signing a contract in case the consumer changes their mind; operate a customer complaints scheme that meets relevant criteria. All the rules governing the conduct and behaviour of authorised businesses can be found on the Claims Management Regulation website. www.claimsregulation.gov.uk. Enquiries about the regulation of claims businesses should be made to

Claims Management Regulation Monitoring and Compliance Unit
57 – 60 High Street
Burton–upon–Trent
Staffordshire
DE14 1JS Telephone: 0845 450 6858 / 01283 233309
Fax: 0845 450 6866 / 01283 233335
Email: info@claimsregulation.gov.uk
www.claimsregulation.gov.uk

OFT guidance
3.The Consumer Credit Act 1974 (the Act) requires companies who offer debt counselling/adjusting services to consumers to be licensed by the OFT. Businesses who are authorised by the MoJ to provide Claims Management Services will also need to be licensed under the Act if they engage in any debt counselling/adjusting activities, including the following:

·advising on how to restructure debts, how to alter debt repayments or how to achieve early resettlement of debts
·contacting creditors and/or negotiating with creditors, on behalf of the debtor, in order to make any of the above arrangements (whether that contact amounts to 'negotiation' or not)
·providing a facility for the debtor to make a single repayment which is then distributed on his behalf to his creditors

4.Following implementation of the new licensing provisions by the Consumer Credit Act 2006 on 6 April 2008, a business applying for debt related licence categories will need to submit a Credit Competence Plan (CCP) as part of its application and should expect to be subjected to an on-site visit as part of the assessment of its competence to engage in this activity as the OFT considers such credit activity to be high risk.


1.From April 2008, licensed businesses can have specific requirements imposed on them if the OFT is dissatisfied with any matter in connection with the business. If such a requirement was not complied with, the business concerned could be subject to a financial penalty of up to £50,000. The OFT can also refuse or revoke a licence if it decides that a trader is not fit to hold one.

2.The OFT published Debt Management Guidance for licensees in December 2001. It applies to all those providing financial management services including commercial debt advice where the debts arise under consumer credit or consumer hire agreements.The Guidance sets out minimum standards of behaviour expected of licence holders engaging in the provision of debt management services, which seek to provide advice and to re-schedule customers' repayment of debt and charge for doing so. Key principles of the Guidance are transparency, acting in the best interests of the consumer and keeping the consumer informed. The Guidance states that advertisements and other promotional material must be accurate and clear and must not mislead, either expressly or by implication or omission. The spirit as much as the letter of the Guidance would apply to Claims Management Businesses where their activities relate to advising and/or otherwise assisting consumers with their debts.

[Amethyst]

Re: MoJ warns consumers over misleading claims

Debt: Advice Organisation Contacts (as well as Legal Beagles of course )




CITIZENS ADVICE BUREAUX

Citizens Advice Bureaux give free, confidential and impartial advice on debt. Details of your nearest bureau can be found in your local telephone directory.
www.citizensadvice.org.uk

ADVICE UK
Contact independent advice agencies through Advice UK at:
Advice UK
12th Floor
New London Bridge House
25 London Bridge Street
London
SE1 9ST
Tel: 020 7407 4070 (National)
Tel: 020 7407 6611 (London)
www.adviceuk.org.uk

For agencies in Northern Ireland contact Advice NI on 028 9064 5919
www.adviceni.net

NATIONAL DEBTLINE
Free telephone helpline for people with debt problems. More information at:
Telephone: 0808 808 4000
www.nationaldebtline.co.uk

CONSUMER CREDIT COUNSELLING SERVICE
Provides free confidential service to help achieve realistic solutions to debt problems, avoid bankruptcy and learn to handle money. More information at:
Telephone: 0800 138 1111
www.cccs.co.uk

PARENTS, PENNIES AND POUNDS
Provides free confidential advice to families on debt and money management. More information at:
Telephone: 0800 652 07775
www.moneystuff.co.uk

[Amethyst]

Re: MoJ warns consumers over misleading claims

Further information and guidance has now been published by the MOJ

New guidance on the marketing of claims for unenforceable consumer credit agreement claims.
We have identified statements made in some marketing and advertising in relation to unenforceable consumer credit agreements that could be misleading. Guidance on what claims can, and cannot be made unless they can be justified, is given in Marketing and Adverting Claims Management Services: Unenforceable Consumer Credit Agreements. This should be read in conjunction with the covering letter.











http://www.claimsregulation.gov.uk/userfiles/file/Unenforceable%20credit%20agreements%20marketing%20 final%20guidance%2006%2001%2009%20(1).pdf
Marketing and Advertising Claims Management Services: Unenforceable Credit Agreements
The MoJ Claims Management Regulation Monitoring and Compliance Unit is responsible for monitoring compliance with the Compensation Act 2006 and related legislation.
We are currently reviewing marketing in relation to unenforceable credit agreements. We have a number of concerns regarding the advertising which we have reviewed to date. In particular, our concerns relate to the use of potentially misleading statements or omissions.
Misleading Statements
Below is a list of the types of statement that are causing concern, along with an example for each. If you make such statements, but are unable to provide evidence to justify them, they could be considered misleading.
The use of misleading statements may lead to enforcement action being taken against you, and could put your status as an authorised business at risk.
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!!”
Marketing and Advertising Claims Management Services: Unenforceable Credit Agreements 06/01/09
2
Marketing and advertising
The Conduct of Authorised Persons Rules 2007 make it clear that web sites are considered to be advertising and must comply with the British Code of Advertising, Sales Promotion and Direct Marketing (“The CAP Code”):
Rule 3 of the CAP Code requires businesses to be able to justify claims they make in their advertising. The use of claims which cannot be justified is a breach of the CAP Code, and therefore a breach of the Conduct of Authorised Persons Rules.
Rule 14 of the CAP Code relates to testimonials. Most importantly, Rule 14.1 provides that “marketers should hold signed and dated proof, including a contact address, for any testimonial they use. Unless they are genuine opinions taken from a published source, testimonials should be used only with the written permission of those giving them.” The use of testimonials which do not comply with the CAP Code is a breach of the Conduct of Authorised Persons Rules.
The use of “No win, no fee”-type statements should be qualified. Guidance is available from the CAP web site in the form of a Help Note:

Failure to comply with the Conduct of Authorised Persons Rules is likely to lead to enforcement action being taken against you, and could put your status as an authorised business at risk.
Misleading Omissions
In addition to the requirements authorised businesses must comply with under the Conduct of Authorised Persons Rules 2007 all businesses must comply with the Consumer Protection from Unfair Trading Regulations 2008 which came in to force on 26th May 2008. The Regulations create a number of offences in relation to unfair commercial practices, misleading actions, and misleading omissions. The Regulations are available online at: The Consumer Protection from Unfair Trading Regulations 2008 No. 1277.
The Regulations make it an offence to omit, or otherwise present in an unclear manner, information that consumers need in order to be able to make an informed decision when choosing a product or service.
Guidance on the Consumer Protection from Unfair Trading Regulations 2008 is available on the Office of Fair Trading web site:
The Office of Fair Trading: Consumer Protection from Unfair Trading Regulations 2008
The omission of important information may be a breach of the Consumer Protection from Unfair Trading Regulations 2008.

[Amethyst]

Re: MoJ warns consumers over misleading claims

So CMS's claim that

''Following an investigation into bank charges and credit card fees by the Office of Fair Trading, the charges imposed were deemed to be both unfair and in some case unlawful.''

could be seen as misleading....as its just wrong. that seems to be the line they have been taking when they have cold called consumers recently. Further down the page they do say something nearer the truth, but sadly that incorrect statement is the part they are using to try and get the £49.99 out of consumers.

[LuggerBugs]

Re: MoJ warns consumers over misleading claims

I see the Rankine's are still offering their services in this arena. Yes, even with their track record.

[Curlyben]

Re: MoJ warns consumers over misleading claims

LB, you read my mind.
Has anyone seen their latest site.

Basically you sell them your card debts and assign them over and they take the OC's to court.

They really do take the pi$$ royally @ £349 a throw PLUS 10% of the debt !!!!

Oh yeah the OFT are fully aware of their activities as they are operating this "venture" without a much needed consumer credit licence

[LuggerBugs]

Re: MoJ warns consumers over misleading claims

Ah, but they "buy" your account for £1 though CB.

[ROBSTER]

Capitol Plus... Beware

Problem is most of the people on this and similar sites are switched on about these type of scams because (thanks to sites like this ) they are well informed about bank charges etc.

The people who are going to fall for these scams are not likely to get these warnings for the above reasoning.

whats the answer?

should we start cold calling people to advise them to get on the site?

[Amethyst]

Re: MoJ warns consumers over misleading claims

get those who DO know these calls are scams to complain to the MOJ asap...they WANT to know.

[ROBSTER]

Re: MoJ warns consumers over misleading claims

I see the Rankine's are still offering their services in this arena. Yes, even with their track record.

I was interested to see that their site boasts £130K in cancelled debt.

£110K of that being Mr Rankines own accounts...mmmm.