Lawyers under spotlight on "fake debt" claims

05/05/2009

The Solicitors Regulation Authority (SRA) has announced that it is investigating ten practices suspected of taking on claims management firms engaged in dodgy practices.

At the root of the investigation is the practice of some firms to drum up business from customers by making deceptive statements - claiming that they can write off most of their debts because the original agreements can't be enforced by the creditors.

The law firms are thought to have charged some people thousands of pounds on these misleading promises.

This is despite the SRA previously warning firms that they faced penalties if they took on business of this kind.

Anthony Townsend, chief executive of the group, explained: "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, cannot easily be challenged as unenforceable.

"We've noticed a sharp increase in the number of solicitors getting involved in this activity since last autumn."

EuroDebt director Kevin Still added: "The SRA announcement has followed recent press releases by the Ministry of Justice, the regulator for Claims Management Companies, and the OFT with regard to concerns they have with both the advertising of these companies and that there may be considerable consumer detriment in stopping payments to your creditors.

"We would recommend that anyone thinking about using the services of a Claims Management Company read the press releases on the Ministry of Justice or Office of Fair Trading websites before selecting a licensed provider. The stories are also accessible from the EuroDebt website at www.EuroDebt.com."

Tags; Debt Management and Banking, Credit Card Lifestyle,

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