The article reassures uninformed debtors that:
"Many people see IVA’s as an easy way out of their debt. However, this is not strictly true. Often, companies only allow you to take on an IVA if you are really struggling. With so many people in debt, they need to know that you are truly in need of help. So, if you are just about getting by but you would like extra help, an IVA may not be for you. It is only if you really, honestly cannot afford your current repayments that certain companies will help you."The fact that IVAs have anything to do with insolvency and are intended - in appropriate cases - to provide an alternative to bankruptcy is not mentioned.
Duly encouraged, debtors might then follow the link to the Trapped.co.uk web site where their headline blurb says that IVAs are: "formal agreements that could see up to 95% of your debt written off".
This claim is clearly in breach of Office of Fair Trading (OFT) guidelines and although Trapped also seem to offer advice on Debt Management Plans, IVAs and Consolidation Loans there is no indication that they have a consumer credit licence.
It is only by ferreting around in the Trapped terms and conditions that we can discover they are owned by a company called Net Basic Ltd who claim to simply act as an online information source.
They say that none of the financial information featured on the site or accessed as a result of a link displayed on the site is intended or considered to be financial advice offered by Net Basic.
As they are clearly providing debt advice and (according to their own terms) taking commissions from the sale of financial products, the OFT might disagree with this claim, Netbasic nonetheless admit that they are not authorised by the Financial Services Authority in relation to the supply of advice in relation to financial products.
Debtors seeking help are unlikely to dig this deeply into the site and are more likely to complete the online 'debt option' calculators which provide the valuable sales contact information that can earn potential commissions.
For debtors who may be seeking IVAs, the Trapped contact information shows that their IVA enquiries are referred to Your Clear Ltd and loan consolidation enquiries to Central Capital Ltd
The Your Clear site makes less extravagant claims about IVAs saying - in common with many providers - that debts can be reduced by up to 75% and they also clearly say on their site that they work with business referral partners.
The payment of commissions for referrals is not mentioned although these costs must inevitably be written into the final fees charged for setting up and supervising IVAs - but Your Clear are still only another agent in the process. They are not the end of the food chain.
They are not listed as an IVA provider on the IVA.com web site and they are not listed on the Insolvency Service database but this is not unusual.
Your Clear act as advisors and according to their information on IVAs they carry out the preparatory work before the proposal for an IVA is passed on to a licensed insolvency practitioner. They do not say who that might be.
This is also not unusual - although it is unusual for Your Clear to claim that they handle applications for interim orders and the filing of IVA proposals with the courts. Only licensed IPs can do this.
Debtors could enter at any point along the sales food chain and might, unknowingly and accidentally, even make direct contact with the IP who would end up supervising their IVA.
If this happened would the eventual nominee & supervisor's fees be reduced by a sum equivalent to any referral fees or commissions that would otherwise be paid along the way ?
Unless the IP is also a solicitor regulated by the SRA - see the previous blog entry on this issue - the answer to this question might not be straightforward because there is no general requirement for the IP to declare the payment of referral fees to either debtors or creditors.
There are also problems because the trail followed here is not exceptional.
False or misleading claims made online by agents or referral sources can lead debtors into the IVA process and misinformation is like a rolling snowball. Some will always stick.
Somewhere behind or at the end of this commission-based sales food chain there are also licensed IP who remain anonymous throughout and can also deny any responsibility for the claims that have persuaded debtors to engage them as supervisor in their IVAs.
How can anyone say that this a properly regulated process ? If corporate insolvencies were either sold or dealt with on this basis it is a safe bet that a statutory regulatory regime would have been put in place by now.
2 comments:
Trapped.co.uk are also unscrupulous about their contact methods.
I had never heard of them in my life before today, when I suddenly got a text and several phone calls to my mobile number from them. I know that neither I nor any of my friends/family would have given them my number. Therefore they must either a) be contacting random mobile numbers telling them that they have submitted a debt plan online and need to confirm it, or b) be getting the phone numbers from third parties.
Either way, it is worrying. I am just ignoring them for now, but I will be keeping an eye on whether they have ended up with any more of my personal details.
Here at Trapped.co.uk we accept that we took a wrong approach with our marketing in the past. Much of the information on our site was provided by a company called Your Clear and we are no longer working with them. We’re much more careful these days, no longer making promises similar to those mentioned in the post above, and also check that all our information is accurate and correct.
If you feel you’ve inappropriately been receiving calls, do feel free to get in touch with me at sarah @ netbasic.co.uk and we’ll investigate the matter further.
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