Many websites and cold-callers help people with “government debt management plans”. This must sound very reassuring if you struggle 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 straightforward. It’s “no”. Read on to learn how to avoid this type of miss-selling from those seeking to profit from your misfortune.
What Is A Government Debt Management Plan?
If you’re a resident of the UK, there is no such thing as a government debt management plan. Salespeople invented the term by misrepresenting the types of debt solutions they offer.
This misrepresentation is an apparent 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 an unduly rosy picture encouraging you to “sign on the dotted line”. Please don’t.
What Role Does The Government Take In Debt Solutions?
The UK government creates insolvency legislation relevant to England and Wales, and the Scottish government creates legislation that applies in Scotland. This legislation creates various insolvency processes, often described more simply as “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 these are 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 defining how an insolvent person might tackle their debts.
Which Companies Are Offering Government Debt Management Plan Options?
Companies that promote debt solutions this way ignore the Financial Conduct Authority’s rules about advertising being “fair, clear and not misleading” on every level.
It isn’t fair to pretend to consumers that they can use a government debt management plan when no such thing exists. It isn’t clear that these debt solutions aren’t being directly endorsed or promoted by the respective governments (perhaps except for the Scottish debt arrangement scheme, which has been promoted with public money). Describing insolvency processes as government-endorsed debt management plans is entirely misleading.
Some call centres and websites do not have to be regulated by the FCA. This means they can defy the FCA’s rules without fear of regulatory consequences. However, the same isn’t true of the debt solution companies they trade with. The FCA clearly holds 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 does not respect legislation and rules designed to protect consumers.
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?
What To Do If You’re Offered Government Debt Management Plans?
If you’re reading a website or an advertisement that offers 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. The offer is false and made to push you towards a decision you will regret later.
The firms that take this marketing approach are in breach of the relevant regulations and care little about treating you respectfully or fairly.
Of course, you may be panicking about the state of your finances, making it very tempting to accept the first helping hand offered to you. Take a step back from this feeling. There are many reputable sources of debt advice readily available to you that will not seek to deceive you for their commercial benefit.
You may wish to contact a reputable commercial debt management plan provider. Check that the FCA appropriately authorises them. 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 debt management trade bodies inspect their members to confirm good standards are in place.
Ask your adviser whether they’re personally and professionally qualified to provide debt advice. If they aren’t, don’t accept their advice and find someone else to talk to. Would you take 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 are so many sources of good advice that you do not need to get involved with the “cowboys” offering “government debt management plans” that simply don’t exist.
Next Steps
Our advice team is all professionally qualified to provide debt advice. If you’d like high-quality help with your finances, please get in touch with 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 the proper standards are entirely in place. If a debt management plan is the best option, our partner debt management provider can get a plan in place quickly and efficiently on your behalf.