Many websites and cold-callers offer people help with “government debt management plans”. This must sound very reassuring if you’re struggling to manage your loan, credit card, bank overdraft, or general living expenses debt.
If you’re in this position should you accept the offer of a government debt management plan to get everything back under control?
The answer is very simple. It’s “no”. Read on to find out how to avoid this type of mis-selling from those seeking to profit from your misfortune.
If you’re resident in the UK there is no such thing as a government debt management plan. The term has been invented by salespeople who are misrepresenting the types of debt solution that they are offering.
This misrepresentation is a clear attempt to present a debt solution product as though it’s in some way offered or approved by the government. The aim is to present you with an unduly rosy picture that encourages you to “sign on the dotted line”. Please don’t.
The UK government creates insolvency legislation that is relevant to England and Wales. The Scottish government creates insolvency legislation that applies in Scotland. This legislation creates various insolvency processes, which are also often described more simply as being “debt solutions”.
You may well have heard of IVAs, bankruptcy, debt relief orders, sequestration and Scottish trust deeds. You might also have heard of the (non-insolvency) Scottish debt arrangement scheme. These are all debt solutions that have been created by legislation.
This certainly does not mean that these are types of government debt management plans. The government isn’t endorsing that companies should offer them nor that individuals should select them. The governments have merely created legislation that defines how an insolvent person might choose to tackle their debts.
The companies that are promoting debt solutions in this way are ignoring the Financial Conduct Authority’s rules about advertising being “fair, clear and not misleading” on every level.
It’s isn’t fair to pretend to consumers that they can use a government debt management plan when no such thing exists. It isn’t being made clear that these debt solutions aren’t being directly endorsed or promoted by the respective governments (perhaps with the exception of the Scottish debt arrangement scheme which has been promoted with public money). It’s entirely misleading to describe insolvency processes as being government-endorsed debt management plans.
Some call-centres and websites do not have to be regulated by the FCA. This means they can flout the FCA’s rules without fear of regulatory consequence. The same isn’t true of the debt solution companies that they trade with however. The FCA is clear that they will hold these firms responsible if they accept (buy) introductions from non-compliant marketing sources.
If you accept the offer of help with a government debt management plan you’re using a firm that has no respect for legislation and rules designed to protect you as a consumer.
If a firm is prepared to act in this manner to win you as a customer, how can you expect them to abide by the rules which will protect you once your debt solution is up and running?
If you’re reading a website or an advertisement that’s offering you a government debt management plan please do not contact them. Their marketing is inaccurate and designed to deceive you.
If you’re contacted by a cold-caller offering you a government debt solution please hang up on them. The offer is false and is made to try to push you towards a decision you’re likely to regret later.
The firms that take this marketing approach are in breach of the relevant regulations and clearly care little for treating you respectfully or fairly.
Of course you may be panicking about the state of your finances which makes it very tempting to accept the first helping hand that has been offered to you. Take a step back from this feeling. There are a great many sources of reputable debt advice readily available to you that will not seek to deceive you for their own commercial benefit.
You may wish to contact a reputable commercial debt management plan provider. Check that they are appropriately authorised by the FCA, this information should be at the bottom of their website and can be verified against the FCA online register. Check whether they’re a member of the DRF or DEMSA. These are debt management trade bodies that inspect their members to confirm that good standards are in place.
Ask your adviser whether they’re personally professionally qualified in the provision of debt advice. If they aren’t, don’t accept their advice and find someone else to talk to. Would you accept medical advice from someone without any training or qualifications?
You could also contact your local Citizens Advice or one of the national debt charities that offer help and assistance to enquirers. There really are so many sources of good advice that you do not need to get yourself involved with the “cowboys” offering “government debt management plans” that simply don’t exist.
Our advice team are all professionally qualified in the provision of debt advice. If you’d like high quality help with your finances please contact our advice team today.
Our debt management plan partners only employ professionally qualified debt advisers. They’re also members of a debt management trade association that inspects them periodically to ensure that the proper standards are fully in place. If a debt management plan is the best option for you, our partner debt management provider can get a plan in place quickly and efficiently on your behalf.