Citizens Advice calls for debt management investigation
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The Citizens Advice Bureau is calling for an investigation into rogue loan finder and debt management firms and a ban on certain practices after claiming such companies are taking advantage of victims of the recession.
In a service report named Cashing In, the national charity says tens of thousands of people are being tricked out of large sums of money.
It has lodged a super complaint with the Office of Fair Trading and is pushing for a ban on cold calls offering credit or debt management services, as well as up-front fees.
The report describes how people are targeted by firms that phone or text out of the blue offering to help find a loan and are then charged a fee for a loan that fails to materialise.
Their details are often passed onto other companies that cold call to offer loans, debt management or claims management services.
Evidence collected by CAB suggests cold calling is concentrated among credit brokerage firms that target people unable to obtain mainstream credit because of poor credit history, low income or current financial difficulties.
The organisation says many problems involve seemingly legitimate licensed credit companies breaching consumer protection rules, but there are also fraudsters posing as credit brokers to extract individuals’ bank details and steal money from their accounts.
Gillian Guy, chief executive of Citizens Advice for England and Wales, says: “Our evidence suggests that rogue operators are cashing in on the desperation of people hit hard by the recession who are least able to afford it, and that this problem is set to grow much worse.
“The framework of consumer protection about unsolicited marketing and up-front fees charged by credit brokers is not only complex, but loopholes give too much room for bad practice to flourish.
“We believe that the Consumer Credit Act and data protection legislation need to be urgently updated to tackle these problems at root cause, but the situation is already so serious we are making a super complaint to the OFT and asking them to launch an immediate investigation with a view to deciding that a ban on cold calls and upfront fees is appropriate.”
Lucy McTernan, chief executive of Citizens Advice Scotland, says: “In times like these, it is essential that those struggling with their finances receive the right kind of advice and support they require for their circumstances.
“Instead, Citizens Advice Bureaux are seeing increasing numbers of people who have suffered as a result of the unscrupulous practices of businesses looking to take advantage of their plight. Evidence from across the UK shows that there is a compelling case for action to stop the harm consumers are suffering as result of cold calling and up-front fees.”
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