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Citizens Advice calls for ban on debt cold calls

Citizens Advice calls for ban on debt cold calls

Category: Debt

Updated: 03/03/2011
First Published: 03/03/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The Citizens Advice Bureau has called for a ban on cold calling that can trick people in debt out of their money.

The charity has lodged a super complaint with the Office of Fair Trading (OFT) , with the aim of a ban on cold calls offering credit or debt management services, and a ban on up-front fees.

Evidence to the Citizens Advice Bureau shows that victims of the recession all over England, Wales and Scotland have been targeted by firms who phone or text out of the blue, offering to help find a loan.

People are then charged hefty fees for a loan that often fails to materialise, and cannot get their money back.

In many cases, they are persuaded to part with their bank account details only to find that money has been withdrawn from their account without their consent.

Some people have even found that their details are then passed on to other companies who bombard them with offers of loans and credit or debt management services.

In many cases reported to Citizens Advice Bureau, people have been subjected to additional rounds of up-front fee charging, but still received little or no service in return.

Evidence suggests that cold calling is concentrated among credit brokerage firms that appear to target people unable to get mainstream credit because of a poor credit history, low income or current financial difficulties.

Such practices are widespread, with 840 million cold calls made by debt management firms in 2009 and loan fee scams affecting at least 110,000 people a year and costing the UK public £190 million annually.

It has been warned that these numbers are bound to rise further at a time when, according to recent estimates, up to six million households are either in arrears with bills or credit commitments or are finding a constant struggle to keep up.

Last year saw the highest number of people declared insolvent in England and Wales since records began in 1960.

"The framework of consumer protection about unsolicited marketing and up-front fees charged by credit brokers is not only complex, but loopholes give too much room for bad practice to flourish," Gillian Guy, chief executive of Citizens Advice (England & Wales) said.

"We believe that the Consumer Credit Act and data protection legislation need to be urgently updated to tackle these problems at root cause, but the situation is already so serious we are making a super complaint to the OFT and asking them to launch an immediate investigation with a view to deciding that a ban on cold calls and up-front fees is appropriate."

The OFT has acknowledged the super complaint and said it will shortly invite interested parties to provide any evidence which may be useful in its investigation. A response is to be published within 90 days.

If you are in debt, there is no need to pay companies fees to access advice.

Debt advice specialists such as the CCCS will offer free and impartial advice to those with debt problems.

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