Money News: Debt write-off claims land IVA companies in trouble with watchdog
Sunday 15 April 2007
A trio of companies that offer individual voluntary arrangements (IVAs) to people heavily in debt have come under fire for misleading claims in their adverts.
The Advertising Standards Authority (ASA) has ruled against radio and television adverts for the Accuma Group, Money Debt & Credit and W3 Debt Solutions. In each case, the firms claimed that customers could write off the majority of their debts by taking out an IVA.
A television advert for Money Debt & Credit, for example, claimed: "Write off up to 75 per cent of what you can't afford to pay." A radio advert for Accuma invited listeners to "get up to 80 per cent of your debts written off".
IVAs are plans that, with the agreement of the majority of creditors, allow borrowers to pay back a proportion of the debt they owe over a set period, usually five years. Rising numbers of people in debt are taking out IVAs as an alternative to bankruptcy, and the popularity of the plans - together with the high fees paid to companies setting them up - has raised concern among consumer groups and banks.
The ads were challenged by a rival IVA provider, Debt Free Direct, which alleged that the Accuma advert, for example, was misleading "because it did not make clear the fees payable under the terms of an IVA".
The ASA upheld the complaint in each of the three cases and said that, in reality, very few customers would be able to write off as much of their debts as the advertisers claimed. It concluded that, with all three firms, the adverts were misleading and should not be repeated.
The move was welcomed by Citizens Advice, whose spokesman, Peter Tutton, said: "We have seen cases of people being persuaded to take out an IVA when it is not appropriate, often with disastrous results."
Earlier this year, the Office of Fair Trading warned 17 firms promoting IVAs not to mislead customers in their advertising - or face formal action.
Unclaimed assets: 'One-stop shop' for forgotten funds
A dedicated "lost and found" service should be set up to let savers trace money in dormant accounts, the Commission on Unclaimed Assets (CUA) and the National Consumer Council (NCC) said last week.
The two independent bodies also called for the new service, which would offer help through a single point of contact, to be tightly regulated.
The recommendations were made as part of a review looking at ways of investing unclaimed funds.
Dormant bank and building society accounts are defined as those that have not been touched by a customer for 15 years; there is estimated to be around several hundred million pounds in them.
The Government said last month that it was aiming to introduce legislation as soon as possible to allow assets in dormant accounts to be reinvested, via charities, for social improvement - without taking away the owners' right to reclaim the money.
A report from the CUA and NCC recommends the creation of a "one-stop shop" to reunite people with their financial assets. It also calls for an overhaul of banking regulation to ensure that dormant funds are properly identified as such by financial institutions, and that more proactive means are used to locate customers who cannot be contacted at their last known address.
"The idea that there may be money not under the mattress but in lost accounts is one that appeals to people," said Ed Mayo, chief executive of the NCC. "This ought to be good news for banks and the Government, who are driving things. But we are warning that any feelgood factor could fast turn into a new consumer backlash if the right protection is not there to make it easy and certain for people with legitimate claims to get their money back."
Mortgages: FSA probe to focus on high-risk loans
The Financial Services Authority (FSA) is to investigate whether "sub-prime" borrowers with patchy credit histories are being treated fairly by banks.
As part of an ongoing investigation into mortgages, the City regulator announced its intention to focus on parts of the market where customers are at greater risk of defaulting.
Areas of concern include sub-prime mortgages, which carry high rates of interest, and also lifetime mortgages, which are aimed at older homeowners who want to withdraw equity from their homes to fund their retirement.
There are mounting concerns over the UK's £15bn sub-prime lending market, which has seen tremendous growth in recent years. In the United States, thousands of borrowers in this sector are struggling to meet their repayments, triggering a rise in defaults and repossessions.
Mortgage sales in the UK are more tightly controlled than in the US, and sub-prime represents a smaller proportion of the market, reducing the risk of a similar crisis here. However, the industry was rocked last week by news that the specialist lender Kensington had issued a long-term profit warning.
Pension mortgages: 'The advice I was given was wrong and now I face losing my home'
You'll need £220,000 for a minimum wage in your retirement
Questions of Cash: I checked in with Air France in time and still missed the plane
Minister's pension promise to firefighters challenged
Mark Dampier: Maybe boom, maybe bust, but we'll probably just muddle along
- 1 Planes go hybrid-electric in important step to greener flight
- 4 Hip hop is both racial and political, and for Iggy Azalea to suggest otherwise is insulting
- 5 Man hospitalised with pneumonia after downing eggnog at office Christmas party
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Alex Salmond has 'broken his word to the Scottish people' says Scottish Lib Dem leader
iJobs Money & Business
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens