Posted on December 5th, 2010 | Categories - News
Firms that offer debt management services have been instructed to alter their methods by the OFT.
The OFT has instructed debt management firms to stop misleading consumers dealing with debt problems.
Debt management firms have been warned by the Office of Trading (OFT) that they must not mislead customers into believing they are charities.
The OFT recently told the firm Baker Evans that it must not use names like the Insolvency Helpline or the Bankruptcy Helpline because it could mislead consumers into thinking that it is a free and impartial organisation rather than a commercial business.
However, director of the company Nick Evans said: “We have disagreed with the OFT throughout our long running dispute. It is clear from our website that we are not free”.
Ray Watson, the OFT’s Director of Consumer Credit said: “Consumers must be able to distinguish commercial debt management companies from free charitable or government services. We will not agree to names that could mislead consumers into contacting companies when they might think that they are accessing free advice”.
Earlier this year the OFT told 129 debt management firms that they must change the way they do business after carrying out an 11 month investigation into their malpractices.
The inquiry found that some firms were advertising that their services were free to debt ridden consumers even though a charge would be issued in the future. It also highlighted that some companies were giving out poor advice and pretending to be charities to draw in clients.
At the time the OFT said: “In some cases, it appears that business models may be set up to take the maximum amount of money from a consumer regardless of their circumstances. Firms are not giving the advice or offering the solution that is in the best interests of the consumer, but instead that which is most profitable to them”.