The Office Fair Trading has warned 17 firms promoting Individual Voluntary Arrangements that it considers their adverts and websites potentially mislead consumers.
This follows a compliance sweep undertaken by the OFT in November of 124 adverts in national newspapers and 57 websites promoting and marketing IVAs.
Some of the claims made about IVAs were considered by the OFT to be in breach of its guidance for consumer credit licence holders engaged in the provision of debt management services, including IVAs.
Examples of misleading statements includ falsely claiming that “up to 90 per cent of your debt may be written off” when the maximum would be 60 – 70 per cent, failing to state that set-up and administrative fees will be required, and failing to display the required warnings with the same prominence as the savings promised.
The businesses have been given four weeks to respond and provide evidence of compliance. The OFT will consider taking formal action against any licence holder which fail to address its concerns.
OFT senior director of markets and projects Alan Williams says: “IVAs are still a solution for many, but those supplying them must be clear and honest about what they can and cannot achieve for consumers in debt and the possible negative implications of entering into such arrangements.
“IVAs are only one of a number of options for people in debt and should only be recommended when in the best interest of the consumer. We will take firm action against businesses which engage in unfair and misleading practices when promoting IVAs.”