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The Office of Fair Trading has closed four insurance advice firms accused of misleading customers over IVA regulations. The OFT reached the decision after the companies were found to have provided people with unsolicited correspondence, which suggested that they had been mis-sold an Individual Voluntary Arrangement, and that perhaps they should consider filing for bankruptcy.
The companies have been named as; Intl Marketing Limited, UK Bankruptcy Limited, UK Mortgage Link Limited and Bankruptcy Limited. The OFT have removed all consumer credit licences from them.
Personal debt expert at beatmydebt.com, James Falla, found that it was not a new development that people beginning an IVA had been targeted by these companies; he also warns that debtors should expect to be contacted by companies of the same scruples. Mr Falla recalls how the OFT were forced to take similar action with the IVA Council several years ago, but it didn’t take long for other people to jump into the vacated spaces.
Mr Falla advises those who aren’t sure about their IVA situation to consult an independent expert, saying; ‘you should either speak to your insolvency practitioner or an independent debt expert who will not charge for the advice they give.’ He also cautioned against simply stopping payments of an IVA, particularly if the debtor is a home owner, and said ‘you should never do so without getting the right advice first.’
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People who have accepted the help from these websites have then been made to pay additional fees to transfer from an IVA to a Bankruptcy service – even when this may not have been the ideal option for them. The OFT found this to be in breach of their Debt Management guidance, and forced the websites to cease.
Two of the closed firms appealed against the decision, Bankruptcy Limited and Intl Marketing Limited, but both were unsuccessful. Bankruptcy Limited withdrew its opposition in March 2011, shortly after Intl Marketing Limited had their objections thrown out by the appeal tribunal. Director of the OFT’s Consumer Credit Group remained firm, agreeing that it was wrong for companies to take advantage of the financially vulnerable, saying they ‘must not use misleading mailings or give advice that they know may not be in the interest of borrowers.’ He also made it clear that the OFT were not about to roll over and let them get away with breaking debt guidance rules, adding ‘Where the OFT has evidence that companies have breached its guidance, it will use its powers to stop them from doing so again.’
For more information about IVA repayments use our IVA calculator for full repayment details.