The Office of Fair Trading has written to up 20 different providers of individual voluntary arrangements (IVAs) warning them that their advertising could mislead consumers.
The letters, despatched yesterday, give specific examples of how press advertisements published by IVA providers could mislead borrowers who are struggling to get to grips with their debts.
The number of IVAs, formal insolvency arrangements that help borrowers escape full-blown bankruptcy, has soared over the past 18 months as more people struggle with debts.However, there has been concern that the credit management plans are being mis-sold as an easy option to debt-stricken borrowers for whom they are not suitable.
The plans, marketed by a burgeoning industry that includes several listed companies, have also been criticised by lenders. A source at the OFT said: "We have found specific examples of misleading advertising and reminded companies that our minimum standards for debt advice services include rules on marketing."
The firms identified by the regulator will be given the chance to amend their advertising. Where the breaches continue, the OFT could revoke the firms' licences to give insolvency advice, which would prevent them arranging IVAs.
The regulator's clampdown will be discussed today at a summit organised by the Department ofTrade & Industry. Ministers have summoned 130 lenders, insolvency practitioners and regulators to a conference in Birmingham to discuss whether debt management plans are being inappropriately sold.More than 31,000 borrowers took out IVAs in the first three quarters of 2006 in addition to 46,000 people who went personally bankrupt.Reuse content