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| 'Misleading' debt firms shut down | 'Misleading' debt firms shut down |
| (about 1 hour later) | |
| One hundred companies offering to write off debts or secure personal injury compensation have been shut down by the Ministry of Justice since April 2007. | One hundred companies offering to write off debts or secure personal injury compensation have been shut down by the Ministry of Justice since April 2007. |
| MoJ spokesman Kevin Rousell said they had been guilty of making misleading claims and using high-pressure sales tactics to get people to pay huge fees. | MoJ spokesman Kevin Rousell said they had been guilty of making misleading claims and using high-pressure sales tactics to get people to pay huge fees. |
| "People desperate for a way out of their financial troubles can be vulnerable," he said. | "People desperate for a way out of their financial troubles can be vulnerable," he said. |
| Consumers were warned to be wary of offers that seem too good to be true. | Consumers were warned to be wary of offers that seem too good to be true. |
| The BBC's Colette Hume said many claims management firms targeted people who owed large sums to credit card or loan companies. | The BBC's Colette Hume said many claims management firms targeted people who owed large sums to credit card or loan companies. |
| And with the industry growing quickly it was becoming increasingly difficult to police, she added. | And with the industry growing quickly it was becoming increasingly difficult to police, she added. |
| Cold calling | Cold calling |
| The MoJ said some of the firms shut down had been using misleading advertising, claiming credit card debt could be written off within six weeks or that 80% of credit agreements were unenforceable. | The MoJ said some of the firms shut down had been using misleading advertising, claiming credit card debt could be written off within six weeks or that 80% of credit agreements were unenforceable. |
| In other cases, companies ignored requests for information from the government's claims regulator or were run by people who had convictions for fraud. | In other cases, companies ignored requests for information from the government's claims regulator or were run by people who had convictions for fraud. |
| There has been a trend towards high-pressure cold calling from call centres Kevin Rousell, Ministry of Justice | There has been a trend towards high-pressure cold calling from call centres Kevin Rousell, Ministry of Justice |
| Rules state that firms must not cold-call potential customers in person and must allow a cooling off period of at least 14 days for anyone considering taking up an agreement. | Rules state that firms must not cold-call potential customers in person and must allow a cooling off period of at least 14 days for anyone considering taking up an agreement. |
| But instead, some were found to be forcing already debt-ridden customers to pay large up-front fees only for the service to later fall through. | But instead, some were found to be forcing already debt-ridden customers to pay large up-front fees only for the service to later fall through. |
| Mr Rousell said most claims management companies were operating within the rules. | Mr Rousell said most claims management companies were operating within the rules. |
| "However, some companies choose to flout those rules and some also target consumers who find themselves in debt," he said. | "However, some companies choose to flout those rules and some also target consumers who find themselves in debt," he said. |
| "People desperate for a way out of their financial troubles can be vulnerable to the misleading marketing that the Ministry of Justice Claims Management Regulator is continuing to tackle. | "People desperate for a way out of their financial troubles can be vulnerable to the misleading marketing that the Ministry of Justice Claims Management Regulator is continuing to tackle. |
| "There has also been a trend towards high-pressure cold-calling from call centres, including making unsubstantiated claims and encouraging people into handing over fees there and then - a decision they regret later." | "There has also been a trend towards high-pressure cold-calling from call centres, including making unsubstantiated claims and encouraging people into handing over fees there and then - a decision they regret later." |
| Mr Rousell said claims companies must give customers accurate information about the realistic chances of success and the costs involved in taking up their services. | Mr Rousell said claims companies must give customers accurate information about the realistic chances of success and the costs involved in taking up their services. |
| They must also not pressurise anyone into making on-the-spot decisions or handing over money without properly considering the facts. | They must also not pressurise anyone into making on-the-spot decisions or handing over money without properly considering the facts. |
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