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Debt advice charities call for protection from “predatory” IVA lead generators

Debt charities have urged the Insolvency Service to develop stronger rules to protect customers from bad practice among IVA lead generators.

The Money Advice Trust and StepChange Debt Charity said they are concerned about the practices of lead generation companies that IVA providers pay for referrals. They are calling on the Insolvency Service to develop stronger rules for insolvency practitioners (IP) who accept referrals from lead generation companies.

 

According to the charities, lead generator ads and websites often make misleading claims about IVAs, and often impersonate advice charities which mislead people seeking help, and then use their data.

 

The charities claim that poor advertising practice is leading financially vulnerable people into unsuitable advice and debt solutions that are not appropriate for their circumstances.

 

The Financial Conduct Authority (FCA) has previously issued warnings on “clone firms” impersonating debt advice charities. In June, two unauthorised firms appeared to impersonate the free, charity-run debt advice service National Debtline.

 

Jane Tully, director of external affairs and partnerships at the Money Advice Trust, said: “We see on a regular basis online adverts that make misleading claims about ‘debt write-offs’ and that impersonate free debt advice charities. These ads direct people to sites offering IVAs that can lead people in financial difficulty down a route unsuitable for them, causing further financial harm down the line.”

 

StepChange head of policy, Peter Tutton, said: “We appreciate that efforts are underway to improve the current inadequacies in regulation, but the risk in the current market is that many people in problem debt following the pandemic may prove easy picking for predatory IVA lead generators. This must be addressed urgently if vulnerable people are going to be protected from harm.”

 

When asked to comment on the alleged bad practice, an Insolvency Service spokesperson said: “As part of our review into the regulatory framework for insolvency practitioners, we asked for comments on what improvements there could be to regulation in the volume IVA market. We are currently reviewing these responses and will be sharing our findings in due course.”

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