Warning over ads that promise debt clearance

~Brock~

cyril82 wrote: »

i think balance is needed, if we were all to go off scouring the net for the worst examples we could find and posting them here we would just be painting a false picture that the whole industry is corrupt.

This thread appears to have been prompted by the recent and fairly strongly worded, by their standards, press releases by the MoJ, OFT and SRA. These organisations do not issue such statements if they feel that just a small proportion of companies are acting badly.

Whilst it is probably incorrect to say that the whole industry is corrupt, it appears to be a breeding gound for a large number of get rich quick merchants whose business models do not include anything remotely concerning actually providing a meaningful service to their clients.

cyril82 wrote: »

If we wanted to we could do the same with other industries, for example loan brokers who charge up front fees and state "gaurenteed acceptance" they are making equally bold and misleading claims, should we start a vendetta against them too?

I am all for a similar 'name and shame' round up of the type of finance broker you mention. Both sets of companies appear to be making a profit out of people's desperation, and misleading them along the way.

cyril82 wrote: »

Some credit agreements are bad, very bad. And the point of the new legislation that these companies use was to make it easier for those consumers who have been victim to seriously unfair consumer contracts to challenge them and not be ripped off.

Consumers have the right to challenge agreements that contain unfair terms. The definition of unfair is very subjective however, and the advice offered by these companies is likely to be prejudiced by the prospect of receiving a nice up front fee if the advice to a consumer is to suggest that their agreement is unfair. These are very difficult to successfully challenge in court.

One thing is for sure though - the current consumer protection laws were not drafted with the intention of consumers being charged up front fees in order to be able to take advantage of them - there are plenty of alternative sources of assistance.

cyril82 wrote: »

So if we are going to do this should we not do a comparisson of the good and the bad? who to avoid at all costs and who to turn to if you're being ripped off and need help?

I have already stated further up my fear that by doing this the whole thread runs the risk of becoming libellous. These claims companies are routinely reported to the authorities for their many and varied breaches, and I do know that action is being taken about them, but I doubt that much of this information can currently be posted on a public forum.

petermb_2

As a claims man I do not advocate seeking to write debts off on unenforceable agreements alone. I certainly think it will become harder and harder to achieve and folks will have wasted their hard earned money.

I know these companies that charge an upfront fees state that they will refund the fee if you fail but as part of that fee may be a commission to the introducer of the case how does that actually work?

And how do you then charge 25% or whatever the fee is if you simply wrote the debt off?
The borrower did not have money in the first place, hence borrowing, so wherer do they find the 25% fee if they do not get any money back when the loan is written off.

I asked one guy in this market and he said that 75% of his clients would pay him over a 6 month period. Those that did not pay would be referred to a Debt Collection Agency.
It took me a while to stop laughing.

All I can say is if you are paying up front fees, " Buyer Beware".

cyril82

petermb wrote: »

As a claims man I do not advocate seeking to write debts off on unenforceable agreements alone. I certainly think it will become harder and harder to achieve and folks will have wasted their hard earned money.

I know these companies that charge an upfront fees state that they will refund the fee if you fail but as part of that fee may be a commission to the introducer of the case how does that actually work?

And how do you then charge 25% or whatever the fee is if you simply wrote the debt off?
The borrower did not have money in the first place, hence borrowing, so wherer do they find the 25% fee if they do not get any money back when the loan is written off.

I asked one guy in this market and he said that 75% of his clients would pay him over a 6 month period. Those that did not pay would be referred to a Debt Collection Agency.
It took me a while to stop laughing.

All I can say is if you are paying up front fees, " Buyer Beware".

When people are talking about £500 up front fees and a 25% completion fee i wonder why there is any discussion about exposing these companies.

In my view they are exposing themselves as being get rich quick con artists anyway.

But i am aware of companies who charge £99 to assess an agreement, it is not refundable but how much would it cost if you bypassed the claims company and went direct to a solicitor because you thought your contract was unfair? and would he refund you your fee if it wasn't unfair/unenforceable after looking at it?

Then the rest of the fee is only 10% not 25% with the better companies and it is payable over 6 months and becomes payable once the agreement is placed in dispute, at which time, in accordance with the consumer credit act, payments to the lender are stopped. This often puts the client in a better financial position immediately as the payments to the solicitor/claims company will be less than their monthly payment to the lender was.

If at anytime the claim fails, all money is paid back to the client on a no win no fee basis and the solicitor will act to return the client to the position they were in before the claim started.

also not all companies make the claim "all loans written off if taken out before 2007" or "most loans can be written off" which are the kind of claims that have got under the skin of the MOJ, OFT and SRA.

The ministry of justice don't want to see financial claims companies wiped out, if they did they would stop issuing licences to them, they simply, along with the OFT and SRA want a clean up of the industry.

So that’s why i feel balance is needed, if we are going to highlight the bad we should highlight the good too. Otherwise this thread runs the risk of becoming a vendetta, and possibly a libellous one.
If it does go down that route, i'll be bowing out as i'm all for educating the consumer but not scaremongering and misinforming them.

~Brock~

Are you involved in the claims industry yourself cyril ?

cyril82

~Brock~ wrote: »

Are you involved in the claims industry yourself cyril ?

not directly brock, but i have worked and have interests in different business sectors ranging from finance, to construction and some, although less of late, interest in internet businesses.

I have through my business dealings refered claims in the past and i have an interest in consumer affairs. I think, having come accross many people, who when in debt, were signed into loan agreements that were poor to say the least, these type of companies, if run properly and charged at a fair rate for the service provided, do have a place in the market.

cyril82

Also, what is not often mentioned is that this process is often not just used to cancel out ones obligations, but simply to remove a customers obligation to pay extortionate interest on loans, so they will pay something back, just not anything unfair, but that is between the solicitor, client and lender to agree.

I personally know of one case where a client undertook this process because he was sold a loan at £25,000 that carried £19,000 interest over 10 years, he was happy to repay what he owed but was unhappy with the high interest.

So it's not all about avoidance of one's responsibilities.

~Brock~

cyril82 wrote: »

I personally know of one case where a client undertook this process because he was sold a loan at £25,000 that carried £19,000 interest over 10 years, he was happy to repay what he owed but was unhappy with the high interest.

So it's not all about avoidance of one's responsibilities.

That's an APR of roughly 13.3%. Hardly extortionate wouldn't you agree. Did he win his case?

petermb_2

cyril82 wrote: »

When people are talking about £500 up front fees and a 25% completion fee i wonder why there is any discussion about exposing these companies.

In my view they are exposing themselves as being get rich quick con artists anyway.

But i am aware of companies who charge £99 to assess an agreement, it is not refundable but how much would it cost if you bypassed the claims company and went direct to a solicitor because you thought your contract was unfair? and would he refund you your fee if it wasn't unfair/unenforceable after looking at it?

Then the rest of the fee is only 10% not 25% with the better companies and it is payable over 6 months and becomes payable once the agreement is placed in dispute, at which time, in accordance with the consumer credit act, payments to the lender are stopped. This often puts the client in a better financial position immediately as the payments to the solicitor/claims company will be less than their monthly payment to the lender was.

If at anytime the claim fails, all money is paid back to the client on a no win no fee basis and the solicitor will act to return the client to the position they were in before the claim started.

also not all companies make the claim "all loans written off if taken out before 2007" or "most loans can be written off" which are the kind of claims that have got under the skin of the MOJ, OFT and SRA.

The ministry of justice don't want to see financial claims companies wiped out, if they did they would stop issuing licences to them, they simply, along with the OFT and SRA want a clean up of the industry.

So that’s why i feel balance is needed, if we are going to highlight the bad we should highlight the good too. Otherwise this thread runs the risk of becoming a vendetta, and possibly a libellous one.
If it does go down that route, i'll be bowing out as i'm all for educating the consumer but not scaremongering and misinforming them.

The MOJ and Which also advise against paying up front fees too.

cyril82

~Brock~ wrote: »

That's an APR of roughly 13.3%. Hardly extortionate wouldn't you agree. Did he win his case?

well, i guess it depends on what you class as fair and what you class as extortionate, personally i would feel ripped off in his case.

The loan was secured against his house, which had over £150,000 equity in it. When you consider that it is possible to pick up an unsecured personal loan for £25,000 at a rate of 8% APR, Which can be paid off in 3 years less for around the same monthly payment and a total interest of Around £8,000, he is paying an extra £11,000 in interest alone in return for offering up his house as security, now if it was me, i'd expect better.

His case was complex, as there were a number of issues with the agreement, but yes he won his case, although i dont know the final details of what was and what was not repaid as that is between him, his solicitor and the lender.

cyril82

petermb wrote: »

The MOJ and Which also advise against paying up front fees too.

Personally i think we will see the "assessment" fee being dropped soon by the better operators in an effort to distance themselves from the low life that have swarmed on the industry.

however the rest of the fee would likely still be required to be paid before completion as the solicitors will not shoulder the risk.

Personal injury solicitors may offer no upfront fees but then they make the client sign an agreement that means any compensation is paid to them, where they will first deduct their fees before forwarding the remainder of the compensation. With the exception of those who now don't charge fees and settle for the costs they recover from the other side as payment enough. But as i understand it, in these financial claims cases fees can not be recovered from the lender in the same way as with personal injury claims.