ASA continues claims crackdown

Another claims management company has been rapped by the Advertising Standards Authority this week for trying to mislead borrowers about how it was able to help them wriggle out of their debts.

UK Logical, a Yorkshire-based company, invited people who wanted to “Legally Clear your Credit Cards & Loans” to get in touch with it. But the ASA ruled on Wednesday that the ads would “mislead” readers about their chances of being able to write off their debt. It also slammed the firm for not making clear that anyone responding to the ad would be charged a £50 admin fee.

The ASA said the offending ad “was likely to be understood by readers to mean that UK Logical had an 80 per cent and above success rate at clearing customers’ credit card debts and loans. Because we had not seen evidence demonstrating that that was the case, we considered the ad was likely to mislead readers about the likelihood of their debts being written off.”

The ad also claimed there were “no hidden charges”, but the ASA found it did not make it clear that UK Logical charged fees to conduct initial reviews of credit agreements, and, although those were refunded in the event of an unsuccessful audit, a £50 charge per agreement was still applied. As such, it said, “the claim |‘No hidden charges’ was misleading”.

There seem to be hundreds of these companies preying on hard-up people who will leap at the chance to ease their financial woes. The ASA has already ruled against two other firms for misleading ads this year, Debt Free UK last month, and Cartel Client Review in January.

Some believe many firms are simply “claims farming” to pick up the fees they will earn, whether or not they take up anyone’s case.

The claims companies’ legal argument is based around the concept of

unenforceable loan agreements which is built on the fact that some loan contracts written before 2007 may not be properly worded under the terms of the 1974 Consumer Credit Act.

Finding evidence that anyone has actually managed to have their debt written off under this principle is difficult, although some banks appear to have backed down rather than face legal fees when they have been taken to court about the matter.

That doesn’t necessarily mean that people have the right to try and get their own loan or credit card written off. Indeed, there’s no question of anyone actually being disadvantaged by being mis-sold a loan or credit card. It seems the argument that these firms use to encourage people to pay them a fee is an untested legal loophole.

Lloyds Banking Group was behind the latest complaint to the ASA but anyone can complain about misleading financial ads. For information, go to: www.asa.org.uk/asa/how_to_complain.