ASA bans debt firm for offering to write-off loans

by Gill Montia

Story link: ASA bans debt firm for offering to write-off loans

The Advertising Standards Authority (ASA) has banned a debt management company from publishing misleading information about the writing-off of consumer debt.

London-based Debt Free UK Ltd operates the Loan-Free.co.uk website, which stated: “If your credit card or loan was taken out before April 2007 it could be completely unenforceable and will not need to be repaid.”

The firm suggested that solicitors can use legislation to arrange for outstanding balances to be written off and even claim compensation, with no impact on a person’s credit rating.

According to the ASA, the company has failed to back this up with evidence.

Recent rapid growth in fee-charging debt management firms has led to a raft of companies offering to use the provisions of the 1974 Consumer Credit Act to nullify credit agreements taken out before April 2007.

An agreement under the Act had to state the amount of credit, the rate of interest, and the number, amount and frequency of repayments.

The absence of any of these details could potentially make some agreements unenforceable, however many more will be valid.

Earlier this year, the Ministry of Justice issued new guidance on fee-charging debt management firms and warned anyone considering using their services to seek independent advice before making a final decision.