OFT investigates complaints regarding cold-calling of IVA services

OFT investigates complaints regarding cold-calling of IVA services

When a person looks to sort out their debt concerns, they are often bombarded with different suggestions, advice and information. Sometimes this can be because they've pursued debt management or IVA (Individual Voluntary Arrangement) companies who give information aimed to their own business interests. Often however, this may have resulted from advice provided via cold-callers, although "advice" is a word used in its absolutely loosest sense. The sales pitch supplied by cold-callers seeking to sell an IVA frequently includes uninformed and optimistic promises which are unlikely to come to fruition.

In these instances, the cold-callers are often already informed that the individuals they are getting in touch with are an easy target for selling an IVA, as the target's information could've been provided to them by brokers of loans. Instead of looking for debt advice, some individuals consult brokers as a last resort to maintain debt repayments, who then pass on their details to IVA companies.

The market for buying such information and other similar lists is large and makes up a major part of the marketing activities of some IVA companies and agents. In addition to IVAs and debt management plans, these firms also frequently sell debt elimination plans, PPI claims services and the notorious "unenforceable credit contracts" agreement that regularly fails to provide what is promised. Many such services expect large upfront costs to be paid before any of the work will start.

Of course, such offers may be enticing to any individual who is in an unfavourable financial situation. It's therefore comprehensible that desperation might lead to an individual paying before an understanding of the company, services and plans has been made. This phenomenon has been noticed by Citizens Advice, which has acted through the means of a "super-complaint" to the Office of Fair Trading (OFT). Such a super-complaint challenges the OFT to investigate the matters further.

Cold-calling by IVA companies must therefore be a practice that's now at risk; this is similar to other parts of the financial services in the UK where this has been the situation for quite some time.

Some IVA agents may charge upfront funds before an IVA is even given to an Insolvency Practitioner who can actually provide the service, with one or two payments making their way to the agents (usually debt management companies) before the process commences. There is no benefit to the consumer for paying this money upfront, in fact they're risking a delay in the commencement of their IVA, stretching the time during which they're legally vulnerable to creditors, and paying money over that certainly could have been put to better use in other areas.

It is therefore clear that an individual commencing an IVA, or thinking about beginning an IVA following on from being cold-called, should entirely stay away from the services and promises of any provider that has cold-called them on the issue.

Conducting research into direct IVA providers would be a more advantageous direction to contemplate, to recognise those who are legitimate and invite positive consumer feedback. The final result is likely to be a faster and more suitable direction to sorting out any lurking debt issue.

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