Customers are being misled by firms promising that they can wipe out their credit card debts by using legal loopholes.
Research commissioned by the British Bankers’ Association (BBA) and conducted by GfK NOP has revealed failures among some Claims Management Companies (CMCs).
Many of these firms offer customers the chance to dispute their card and loan agreements in court – with the possible outcome that the debts can be written off as unenforceable.
However, the "mystery shopper" research found that certain CMCs were advertising "unsubstantiated" success rates and misleading "no win, no fee" deals.
The BBA also criticised some of the firms for specifically targeting vulnerable customers, including elderly people with high levels of personal debt.
Eric Leenders, executive director for retail banking at the BBA, said: "Consumers should be free to take professional advice to help them, but what was once a legal service is now becoming a mass-market industry and that brings with it some significant and fundamental quality control problems."
He added: "The best advice is, as always, that if something sounds too good to be true, it probably is."
Alternative ways of reducing debt without getting involved in legal disputes include reducing personal spending and signing up to an equity release plan.
Posted by Alison Stephenson
