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Brits warned against ‘write-off debt’ scams

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20/09/2022
Unauthorised claims management firms are targeting Brits with ‘write-off debt’ schemes which could leave them paying fees even if they’re unsuccessful.

The city watchdog, the Financial Conduct Authority (FCA) is warning consumers to be on their guard against scams offering to wipe out debt, mainly mortgages, and get compensation from lenders.

It said these schemes may include reclaiming past payments of capital and interest.

They often charge a fee for the legwork and might add more fees when the scheme fails.

The FCA said this can lead to “significant losses” for those involved and said people should be cautious of any firms offering this service.

It said these type of scams often increase in times of economic hardship and can involve vulnerable victims who are already struggling with money.

They may try to convince individuals by pointing to ideas such as ‘Strawman’, ‘Freeman of the Land’ and ‘Sovereign Citizen’ suggesting that the government and laws of a country have no powers over people.

Avoid unauthorised firms

But the FCA reminds UK consumers that almost all firms and individuals offering, promoting or selling claims management services in the UK must be authorised or registered by it.

As such, these ‘write-off debt’ schemes are unlikely to be authorised and are targeting people in the UK which is against the law.

Anyone who uses an unauthorised firm will not have access to the Financial Ombudsman Service to deal with complaints and no protection will be offered by the Financial Services Compensation Scheme (FSCS) if things go wrong. This means you’re unlikely to get your money back if a firm fails.

The FCA added that for anyone who stops making repayments on their debts could face action from their lender. This could include debt recovery and repossession of your home.

To help protect yourself from scams, check the Financial Services Register to make sure the firm is authorised and has permission for the service it’s offering you.

If you’ve been contacted unexpectedly by a business or individual, make sure you call them back using the contact details on the register.

If you think you’ve been approached by an unauthorised firm, contact the consumer helpline on 0800 111 6768.

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