Simon Read: Time to crack down on bogus claims
Saturday 20 June 2009
A claims management company was accused this week of "misleading" people by stating it could help people wriggle out of their debts. The Advertising Standards Authority upheld a complaint from Lloyds TSB about adverts from a firm called Debt Free.
The problem ads claimed: "If your credit card or loan was taken out before April 2007 it could be completely UNENFORCEABLE AND WILL NOT NEED TO BE REPAID [their capital letters]. Our solicitors can use government legislation to arrange for your outstanding balances to be written off and claim compensation for you."
But the ASA ruled that the statement "was likely to mislead readers as to the likelihood of their debts being written off". It also upheld a complaint that the firm's ads failed to make clear the cost of using the service. The company says it refunds people's fees – minus a £50 administration charge – if it can't help them write off their debts.
Now, putting aside for a moment the moral argument behind this, the fact is that companies like Debt Free can make a pretty penny just by encouraging everyone to use their service, whether or not they have any chance of being successful. They just need to collect administration charges from 20,000 people to pocket £1m, for instance.
Their ads are seductive and persuasive – after all, who wouldn't jump at the chance of clearing their debts? There's also an element of sticking one to the banks by getting out of a loan or credit card debt. But underlying it is the fact that these companies are jumping on a bandwagon that is encouraging people to weasel out of their financial obligations.
The concept of unenforceable loan agreements is based on the fact that some loan contracts may not be worded exactly right under the terms of the 1974 Consumer Credit Act. There's no question of people being mis-sold loans or credit cards, just that a legal loophole may make their credit agreement harder to enforce.
As such, this has nothing to do with consumer compensation or wrongdoing by lenders and all to do with people being encouraged to find a sneaky way to avoid paying their bills. When anyone takes out a loan, they know they have to repay it. Trying to find a way to get out of the debt strikes me as being morally repugnant.
The number of these companies seems to be growing as they see a chance to make some easy money, but their claims of being consumer champions or fighting for compensation are bogus. The Ministry of Justice has already warned about these firms, but it needs to take firmer action to curb their activities. Until it does so, they will be free to carry on preying on the hopes of the hard-up.
*By the way, a directory of mobile phone numbers goes live next week, meaning your mobile number will be easily available to anyone, including those annoying cold-calling firms. However, you can get your number removed from the directory by going to: www.118800.co.uk/removeme/remove-me.html
Independent Partners: See how much you could save by switching credit cards. Compare now
elephant appealThe first 23 lots in our charity auction have now gone. But there are 22 more still up for grabs
Look beyond the usual shows for the best festive telly
Geoffrey Macnab does not like the comedian's big screen debut
The battle for control of Stieg Larsson's £30m legacy
Bargain Hunter: Keep taking the tablets to get £30 off a new Kindle Fire
Mark Dampier: Britain's small-cap funds punched well above their weight this year
Questions of Cash: I want to top up my national insurance contributions and get a better pension
How to start your own internet business
A savings account is not the best place to save
- 1 Tim Sherwood challenges Daniel Levy to set out vision for Tottenham Hotspur’s future
- 2 French pub fined €9,000 after customers returned empties to bar - because it's 'undeclared labour'
- 3 Sun will 'flip upside down' within weeks, says Nasa
- 4 #Teamnigella: It’s the only side to be on
- 5 Christmas comes early: Justin Bieber is 'retiring from music'
- < Previous
- Next >
iJobs Money & Business
Day In a Page
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.