Warning over 'misleading' debt ads that may leave hard-up Brits worse off

HARD-UP Brits are being warned about "misleading" ads from debt firms which could leave them worse off.

Today the Advertising Standards Authority has banned “misleading” ads for two debt companies offering the individual voluntary arrangements (IVAs).

Both wrongly gave the impression they were officially sanctioned to offer the plans – and one even suggested it was linked to respected debt charity StepChange.

Instead, Fidelitas Group and Step Debt Support are commercial operations that make money by helping arrange IVAs, a formal type of personal insolvency.

Such adverts were slammed by debt charities who say IVAs are "high risk" and often may not be the most suitable option.

Fidelitas Group had its adverts banned by watchdogs for a string of false claims, including suggesting it was endorsed by the Government and also wrongly saying they were qualified to provide debt counselling.

Another outfit National Service Direct, trading as Step Debt Support,  also broke rules by exaggerating the speed debts could be cut.

It was also wrapped for misleadingly suggesting it was linked to respected debt charity Step Change and the Government.

The ASA said both firms also suggested the services were free, when they weren't.

Both had internet search ads banned over fears struggling families would use their services to cut debts – but would not get the help they expected.

Richard Lane, from StepChange Debt Charity, said: “People who need help with their debts need advice, not a hard sell. 

“It’s clear that there’s a need for better protection to prevent people being hoodwinked into thinking they are dealing with a debt advice charity, when in fact they are simply being lured to provide their personal details to lead generators working on behalf of commercial IVA factories.

“The ASA has confirmed what we already knew: there is a lot of misleading advertising out there, including from outfits impersonating legitimate debt advice organisations.”

StepChange said the fee incentives to firms arranging IVAs mean they often give the wrong advice. 

The charity said: “While IVAs can be a very good solution for some people, they can be high risk and expensive if they fail – so it is imperative that they are not mis-sold.”

How to cut the cost of your debt

IF you’re in large amounts of debt it can be really worrying. Here are some tips from Citizens Advice on how you can take action.

Check your bank balance on a regular basis – knowing your spending patterns is the first step to managing your money

Work out your budget – by writing down your income and taking away your essential bills such as food and transport
If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs

Pay off more than the minimum – If you’ve got credit card debts aim to pay off more than the minimum amount on your credit card each month to bring down your bill quicker

Pay your most expensive credit card sooner – If you have more than one credit card and can’t pay them off in full each month, prioritise the most expensive card (the one with the highest interest rate)

Prioritise your debts – If you’ve got several debts and you can’t afford to pay them all it’s important to prioritise them

Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don't pay

Get advice – If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further

Groups like Citizens Advice and National Debtline can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans

Complaints had come from the Money and Pension Service as part of its project into irresponsible debt advice claims.

Caroline Siarkiewicz, chief executive of the Money and Pensions Service, said: "The ASA's rulings on the practices of some commercial firms are a positive and welcome development for people struggling with debt.”

She said there were risks that consumers may end up taking up services unknowingly from a commercial organisation when they had been searching for free advice. They may end up paying unnecessary fees, she said.

She continued: "The ASA decision has come at a crucial time. This month we anticipate a call about debt every four minutes to the Money Advice Service helpline, and we expect the demand for debt advice to increase over the next 12 to 18 months due to the financial impact of the Covid-19 pandemic.

"Many people will need support for the first time but also may not know where to begin.

"Just as a doctor reviews a patient's circumstances in the round before recommending treatment, free debt advisers assess a person's situation holistically before recommending a debt solution. There are lots of ways out of problem debt."

But she said many commercial firms "specialise in providing just one kind of debt solution and cannot advise on the whole range of options available".

The Sun has contacted Fidelitas Group and Step Debt Support for comment.

Last year, The Sun highlighted how copy cat debt firms are still appearing at the top of Google searches.

We've also written about how one Londoner paid off £24,000 debt in eight months using the "snowball method".

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