"Along with the FCA’s warnings about clone firms impersonating debt advice charities like us, this confirmation is helpful, but it cannot be the end of the story."
The Advertising Standards Authority (ASA) has banned two misleading ads by commercial debt advice firms.
Both investigations were launched following a complaint by the Money and Pensions Service (MaPS) after it conducted a review of online advertising practices of commercial debt advice/solutions providers.
One of these advertisers, National Direct Service trading as Step Debt Support, was found to have misled consumers by purporting to be associated with the UK Government and StepChange Debt Charity, among other misleading statements.
The ASA also concluded that the references to 'debt advice' in the advert were misleading because Step Debt Support is not authorised by the FCA, and could only put someone forward for an IVA.
The second firm, Fidelitas Group trading as writeoffmydebt.com, also implied that it was associated with the Government, the Money Advice Service and Citizens Advice in its paid-for search ads.
Additionally, the ASA found that its claim "Get expert advice today" was misleading because writeoffmydebt.com is not listed by the FCA as authorised to provide debt advice or counselling.
Additionally, the Trustpilot rating in its ad was found to be misleading as it linked to a different company’s rating on Trustpilot’s website.
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, as well as the free debt advice sector which supports these customers.
“Some of the practices deployed by these commercial firms were concerning. For instance, many implied a misleading association with genuine debt advice charities, leading some customers to take up services unknowingly from a commercial organisation when they had been searching for free advice. Other claims made by some firms had the potential to get people to ask for a debt solution that may not be suitable for their circumstances and in some cases require them to pay unnecessary fees.
“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 advisors assess a person’s situation holistically before recommending a debt solution. There are lots of ways out of problem debt. However, many of these commercial firms specialise in providing just one kind of debt solution and cannot advise on the whole range of options available.
“Free debt advice can be life changing for people in difficulty. Our research shows that 63% of customers with debts are reducing or clearing them within 3-6 months after receiving impartial debt advice.”
Richard Lane, director of external affairs at 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. Along with the FCA’s warnings about clone firms impersonating debt advice charities like us, this confirmation is helpful, but it cannot be the end of the story.
“What matters now is that there is more decisive action taken by regulators to tighten up the oversight of how firms who provide IVAs acquire their customers, so that people get better advice about all their possible options for dealing with debt before making a premature decision, especially one that may be based on unethical practices or false pretences.”