Thu 14th Dec, 2006
Debt Free Direct calls for investigation into misleading ads
Debt Free Direct has said that radio advertisements that claim that people with money problems can escape up to 80 per cent of their debts are ‘misleading and unethical’, reports the Guardian. The debt management company has complained to the Advertising Standards Authority (ASA) that the rival firms have flouted advertising rules by exaggerating their ability to write off debts to banks and other lenders. Debt Free Direct named several firms in its complaint dossier, including Accuma, Spectrum and W3 Debt Solutions.
The ASA is considering the dossier and the Guardian suggests that recent accusations by Shadow Chancellor George Osborne about debt dodging will put the organisation under pressure to launch a full inquiry. Mr Osborne said: ‘I am concerned that people may be being encouraged by unscrupulous IVA companies to commit to IVAs, even where this may not be the right course of action.’ He called for ‘firm action’ against companies offering ‘false or misleading advice.’
Mr Osborne added that companies counselled people on low incomes to sign individual voluntary arrangements, which harm their credit rating. Instead, they could make an informal arrangement with their creditors. IVAs are legal contracts which allow debtors to make monthly repayments following a deal to pay off a reduced amount of their debt. According to PricewaterhouseCoopers an IVA is taken up every seven minutes in the UK.
Debt Free Direct says that people are ‘morally obliged to repay their debts’, adding: ‘It is not right to help people avoid their legal liabilities.’