Government promises claims management company crackdown

18/02/2009

New guidance aimed at tackling false or misleading promises to debt-hit consumers made by claims management companies has been unveiled by the Ministry of Justice.

Unscrupulous firms were ordered to "stop" or "face action" from the government.

The firms offer services such as applying to have outstanding unsecured debts from customers to be written off by providers.

However, some claims management firms are currently breaking consumer protection regulations by including misleading statements such as claiming to have a "100 per cent success rate" or offering a "guaranteed positive outcome" for these applications.

Commenting, justice minister Bridget Prentice said: "Vulnerable people facing debt problems need help and support.

"We would urge anyone who is considering using a business offering such services to think carefully and seek independent advice before making any final decisions."

Ray Watson, Office of Fair Trading director of consumer credit, added: "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."

Tags; Housing Debt and Bills, Young Family Finances, Credit Card Lifestyle, Recent Graduate Debt,

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