Avoiding the debt scams: Belfast Telegraph


Cold calls from high pressure salesmen are a real nuisance. Personally I hate them so much that I registered with the Telephone Preference Service. But a recent spate of calls has reminded to update the register with my current address. (Anyone who wants to do the same can also register, at www.mpsonline.org.uk/tps/.)


So far this year I have received about one call a week from agents asking if they can act on my behalf to clear old debts. (In fact I don’t have any – which proves that they operate on chance, not knowledge.) As this page explained last week, there are lots of these calls being made to people across Northern Ireland at present. The simple advice is don’t be taken in.


The problem is reaching crisis point. The Office of Fair Trading is so worried that it issued a special warning last week about people claiming to be able to write-off old credit card debts.


Agents on the phone sound plausible. They explain that the Consumer Credit Act requires lenders to have a proper contract for a debt and if they cannot locate this, then the debt is unenforceable. This is only partially true.


It is correct that there should be a contract. But debtors are being fleeced out of their money on the pretence that this means that if the lender cannot produce the contract that the debt does not have to be paid. The sting, of course, is that innocent consumers who owe money are being persuaded to pay an advance fee for a service – to clear the debt – that they will never receive. Many of the companies cease trading days after taking the money.


New guidance


Now the OFT intends to issue guidance on this thorny problem. The legal situation, explains the OFT, is that lenders must provide a ‘true copy’ of a credit agreement, but the true copy does not have to be a photo copy or exact copy of the original.


The lender may reconstruct an agreement, providing it is accurate – and it does not require the borrower’s signature or date of signature to be included. Where the lender is unable to comply with this, it has limited recourse to debt collection and should not threaten court action.


There has been a great deal of confusion over the meaning of these sections with many borrowers being misled into thinking that they can get their debt written off,” explains Ray Watson, director of consumer credit at the OFT. “This guidance is to clarify the legal position and the OFT view on standards expected of the industry, and to make consumers aware that they may be at risk if they seek to use these sections to avoid paying legitimately owed debts.”


Consumers should be equally aware of cold callers offering other debt management services. Some companies are contacting people who have taken out individual voluntary arrangements (IVAs), suggesting they can stop making payments on these.


One financial advisory agency, EuroDebt, has taken the unusual step to issue a warning to consumers not to use another agency, the IVA Review Board. EuroDebt says that if consumers follow advice to stop making payments agreed under an IVA they risk having the IVA terminated and being immediately liable for the repayment of the entire debt.


OFT action


The OFT confirms that it has taken action against the IVA Review Board, but is at present unable to prevent it from trading – with the result that consumers may still be contacted by it, or by the associated ‘Department for Personal Insolvency Review and Assessment’. It maintains an impressive website under the IVA Review Board name.


A spokesman for the OFT says: “We have not made an announcement yet because the company that owns the IVA Review Board has appealed, but we have taken away their credit licence.” While the appeal is pending – and it could take some time before the appeal is heard – the IVA Review Board can continue operations.


The underlying problem, says Moneysupermarket.com, is the extent of consumer debt caused by the recession is such that legitimate debt advisors are swamped. At present, about 20,000 consumers a month sign debt management plans. Debtors who cannot wait are turning to agencies charging fees, not all of whom operate to high standards.


Tim Moss, head of loans and debt at Moneysupermarket.com, warns: “We can expect to see around 30% more applications for debt management plans this year and consumers have to be very careful when dipping their toe into this world, as it currently exists outside the realm of government regulation.” He says that where consumers do choose a commercial agency, they should be certain they understand the fee structure and likely charges and only use firms conforming with the DEMSA (Debt Managers’ Standards Agency) OFT Approved Code.

But consumers in trouble should start by contacting either Citizens Advice (details via its website, www.citizensadvice.co.uk/en/getadvice/) or the Northern Ireland Executive-funded agency, advice4debtNI (0800 917 4607).


I have three credit cards with the same APR%. I pay £150.00 a month to each to cover the interest and a small part of the balance. What is the best way to pay-off the amount I owe?


A. Virgin Money, Santander, Egg, Halifax, BT and Nationwide all do 0% balance transfers for existing credit card balances. The lowest transfer balance fee of these is 2.98% with Virgin Money: the others charge 3%. If you transfer all your balances to one of these cards, your repayments will pay-off the balance rather than simply keeping track with the interest. It is important to avoid new interest charges by not using your new card for purchases or cash withdrawals.

1 thought on “Avoiding the debt scams: Belfast Telegraph”

  1. The beginning of your article makes a statement “Cold calls from high pressure salesmen are a real nuisance”

    Further on in the article you mention our company and the clear link you are attempting to make is that our company make cold calls, which is fundamentally wrong. Your reference to IVA Watchdog is full of inaccuracies and implied untruths and as such gives us cause for grave concern.

    You rely on a quote from Eurodebt who are a commercial competitor of IVA Watchdog and by definition have a vested interest in improving their position at our expense. They are an “IVA factory” and their (alleged) comment concerning the effect of a failed IVA is intentionally misleading.

    You then attempt to hinge your reference to our organisation on the current OFT action. Thus creating the false impression that the OFT has taken its action because of our business practices. Had you taken the time to investigate your story more thoroughly you would have known that the OFT action is because they seek to link us to the IVA Council for which there is absolutely no evidence. We have on numerous occasions categorically denied that we have any links to the IVA Council.

    The OFT also claim that we are linked to a number of companies but the only evidence they can produce for this association is some at arms length business transactions which were conducted and the coincidence that we rent offices from a third party landlord which were previously rented to one of the aforementioned companies.

    In your attempt to discredit our business you then immediately refer to “The underlying problem” and “legitimate debt advisors” clearly making the link that we are in some way not legitimate.

    Your story allows the reader to draw the conclusion that the OFT have an issue with the way we conduct our business. In fact the OFT have not made any comment about our business model, trading practices or conduct.

    You then make a rather clumsy attempt to suggest that in some way any fee we charge is disproportionate to our service. Your story would have better served your reader if you had bothered to conduct some worthwhile fact based research.

    As a result of our investigations and reports from our customers it seems that a pattern is emerging.

    IVA’s are routinely being used to hide assets from creditors. The IP’s simply rely on information given by the debtor and items such as cash, overseas properties and other realisable assets are overlooked.

    On the other hand a Bankruptcy Order is an honest solution allowing the trustee to examine the debtor’s situation in full.

    You fail to identify that the experts you are relying on are ignoring some simple facts in order to either promote the use of IVA’s or hide from their responsibility. Many debtors find themselves in IVA’s when clearly a Bankruptcy would have been a cheaper and quicker solution for them.

    There are many insolvency experts who categorically state to their customers that an IVA is a discreet solution, which is clearly not true. The information concerning their IVA is a matter of public record.

    We also have evidence that on the advice of an Insolvency Practitioner a debtor’s partners was taken, from a perfectly solvent position, into the IVA with debts as little as £500.

    We calculate that 80% of the people we speak to would be better suited to a bankruptcy than an IVA, where the other 20% are concerned, if the best advice for them is to remain in their IVA we have no hesitation in telling them of our opinion.

    It is a fact that when comparing the contribution in an IVA and the contributions in an Income Payment Order the cost to the debtor would be far greater in an IVA yet you make no mention of this and, typically, neither do IP’s.

    IVA companies continue to miss sell, whilst trying to discredit our business by using publications such as yours to promote the message of rogue and dubious behaviour when in fact we hold the moral high ground. We have never and will never suggest that a bankruptcy would be better for the debtor unless we can justify this statement. We are fully aware that if we lied to our customers and led them along a route that would not benefit them we would then be subject to rightful criticism and examination.

    It would seem to us that much of the criticism directed at us is not because of any wrong doing on our part but simply because many of our detractors are, like us, profit making organisations. They see us as a commercial threat to their business and as a result try to promote the impression that we have broken the law, have no right to trade and give poor advice, none of which are true.

    In conclusion we are currently working with a barrister (inner temple) who is examining a number of issues; one of which is the constant criticism and mis-information concerning our business. In the future we intend to be more proactive in regard to defending our good name.

    We would welcome the opportunity of putting our point of view to a wider audience and would be happy to submit press releases to your publication for consideration if we knew that they would be given a fair hearing.

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