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Debt management firms warned by government

March 16, 2009 by admin  
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Officials from the government have been warning debt management firms to stop misleading consumers with regards to getting their debts written off.

The warning was issued to companies that run adverts advising consumers that a large portion of their debts could be written off, but government officials are concerned about misleading information relating to the extent of the debt write offs.

The warning was issued to companies by the Justice Minister, Bridget Prentice, who has told the companies that if they make misleading claims in their advertisement they could face enforcement action. Some of the misleading claims that have been highlighted by the government include claims that consumers could have 80 percent of their debt written of or that they could have their credit card debt written off within six weeks.

Bridget Prentice stated: ‘Vulnerable people facing debt problems need help and support. We have produced this guidance to protect innocent customers from being misled by businesses advertising easy and quick arrangements for outstanding loan, credit card and other similar debts to be written off and compensation to be obtained.’

She added: ‘We would urge anyone who is considering using a business offering such services to think carefully and seek independent advice before making any final decisions.’

An Oft official said: ‘The OFT will not hesitate to take enforcement action against licensed claims management businesses who engage in unfair business practices by deliberately misleading vulnerable consumers about the services they offer. Businesses should also be aware that if they offer debt counselling or debt adjusting services without holding an appropriate licence, they will be committing a criminal offence and risk prosecution, and that any agreements they enter into with consumers whilst unlicensed may be unenforceable.’

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