Thanks As Corrupt Debt Advice Firm Shut Downposted on 13 December 2010 | posted in General Category | ( 0 ) CommentsIntegrity Debt Solutions has welcomed news that a corrupt debt advice firm has been shut down, after being forced into liquidation by the Insolvency Service. The company which advertised itself as a 'one stop shop' for dealing with bankruptcy, has a track record of complaints and reputation for offering poor debt advice whilst not keeping the interests of the person in debt to heart. Debt advisers at Integrity welcomed the news saying 'companies like this deserve to be shut down, in times like now where debt is on the increase, there is no place for poor debt advice, and this serves as an example for companies going down the same route. We do not condown behaviour like this and we hope that this also serves as a warning to other companies who mis-sell and advise badly to people in debt'. UK Bankruptcy Limited (UKB), which was based in Dorset, but incorporated in Edinburgh, attracted clients through advertising and referrals from another official looking website called ‘IVA Council’. The investigation found the company derived the majority of its income from fees charged to clients who used UKB to make themselves bankrupt. The fees, often running into thousands of pounds, bore no correlation to the work undertaken or the extent of the clients’ level of debt. The advice given was often very basic and could easily have been obtained for free. In some cases the fees charged to clients’ credit cards rolled into the ensuing bankruptcy whilst the amount of fees appeared to equate to the amount of credit still available on their cards. This action meant that, in effect, the clients’ creditors were funding the company’s fees with no prospect of repayment. The investigation also found evidence that some clients allowed the company to maximise the amount of fees charged to their cards, in return for which they were given “cash back”. Between about October 2007 and June 2008 the core business of UKB was generated by leads provided by an organisation called the IVA Council (IVAC), an unincorporated association which purported to be a voluntary independent body that monitored the insolvency industry. In reality IVAC was a marketing tool that generated leads for UKB by suggesting to individuals that they had been “mis-sold” an Individual Voluntary Arrangement (IVA) and they would be better placed financially by petitioning for their own bankruptcy. Clients referred via the IVAC were almost invariably persuaded by the UKB to discontinue an existing IVA and enter into bankruptcy. Commenting on the case, Stephen Speed, Chief Executive of The Insolvency Service said: “At a time when finances are so tight for so many people it is regrettable that a business like UK Bankruptcy Limited should use dishonest practices to exploit the demand for debt advice for its own financial gain. I hope the action we have taken will serve as an important reminder to anyone in debt; good quality advice is freely available from charitable organisations. In addition our publication ‘In debt: dealing with your creditors’ provides an overview of the personal insolvency options.” Notes About this case: 1 The Office of Fair Trading have issued warnings recently about firms operating in this sector with concerns over declining standards and non-compliance with their Debt Management Guidance issued in 2001. This Guidance applies to all firms providing financial management services including IVAs, personal bankruptcy and commercial credit repair. In particular the OFT have warned that firms often mislead individuals with debt problems with websites that imply they have some official status or sanction from the Government and are less than transparent about the level of their charges. 2 UK Bankruptcy Limited was incorporated in Scotland on 1 June 1992 and its registered office is at 24 Great King Street, Edinburgh, EH3 6QN. The company carried on business from Alton Chambers, 37 Church Road, Parkstone, Poole, Dorset, BH14 8UF. 3 The company’s debt advice business was carried on from about June 2005 to the presentation of the petition. Its association with the IVA Council lasted from October 2007 to June 2008. 4 The investigation was carried out under section 447(3) of the Companies Act 1985 by officers from Company Investigations, part of The Insolvency Service. 5 The petition was presented on 8 December 2008 under s124A of the Insolvency Act 1986 on public interest grounds that; the company’s business was unscrupulous, inappropriate and operated to the detriment of creditors of the company’s clients and sometimes the debtors themselves. 6 The company’s turnover for the year ended May 2008 was approximately £2.8M and it had more than 3,000 clients. This shows that people should always check who the company is that they are dealing with and if they are regulated and registered. Integrity Debt Solutions advises people to always be aware of companies like UK Bankruptcy Limited as they clearly did have the debtors interests at heart. Share this blog entry:
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