OFT blasts ‘charity’ debt firms

The OFT has warned debt management companies that they must not masquerade as charities or government services after refusing an application the trading names ‘The Bankruptcy Helpline’ and ‘The Insolvency Helpline’.
The watchdog refused to authorise the use of these names because they could potentially mislead consumers into thinking they are dealing with an impartial, non-commercial or governmental organisations, rather than a commercial enterprise. It says consumers must be able to differentiate between the two.
The company in question, Baker Evans, does have the right to appeal against the decision to the First-tier Tribunal.
Director of consumer credit at the OFT Ray Watson said: “Consumers must be able to distinguish commercial debt management companies from free charitable or government services.
“We will not agree to names that could mislead consumers into contacting companies when they might think that they are accessing free advice.”
The move follows a major surge in debt management companies, launched to exploit the millions of consumers who have fallen into arrears during the recession.
Banks and building societies wrote off £1.83bn of debt that people had defaulted on during the three months to the end of September, although this is still a fall of 47 per cent compared with the £3.47bn cancelled during the previous quarter. This was the highest level since Bank of England records began in 2004.

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