The regulator ruled that National Direct Service, trading as Step Debt Support, and Fidelitas Group Limited were both found to have breached advertising rules and knowingly mislead consumers.

Complaints were made to the ASA by the Money and Pensions Service about the firms which both claimed they could set up individual voluntary arrangements (IVAs) and reduce people’s debts.

The ASA found that the Step Debt Support advert misleadingly suggested associations with the StepChange Debt charity and the government. It also found that wording in the advert suggested Step Debt Support was authorised to provide debt counselling. This wasn’t the case as the company sold on debt leads to third parties.

Fidelitas Group’s adverts were banned for a number of misleading claims, including suggesting it was endorsed by the government and also wrongly saying it was qualified to provide debt counselling.

The ASA said both firms also suggested the services they offered were free when, in reality, they weren’t.

Genuine debt charities have raised concerns that misleading advertising by lead generators is putting people at risk of being pushed towards potentially inappropriate debt solutions.

Richard Lane, director of external affairs at StepChange Debt Charity, said: “People who need help with their debts need advice, not a hard sell. It’s clear that there’s a need for better protection to prevent people being hoodwinked into thinking they are dealing with a debt advice charity, when in fact they are simply being lured to provide their personal details to lead generators working on behalf of commercial IVA factories.

“The ASA has confirmed what we already knew: there is a lot of misleading advertising out there, including from outfits impersonating legitimate debt advice organisations.”

StepChange is calling for regulators to examine how firms which provide IVAs acquire their customers, so that people get better advice about all their possible options for dealing with debt before making a premature decision.

Caroline Siarkiewicz, chief executive of the Money and Pensions Service, said: “Some of the practices deployed by these commercial firms were concerning.

For instance, many implied a misleading association with genuine debt advice charities, leading some customers to take up services unknowingly from a commercial organisation when they had been searching for free advice. Other claims made by some firms had the potential to get people to ask for a debt solution that may not be suitable for their circumstances and in some cases require them to pay unnecessary fees.

“The ASA decision has come at a crucial time. This month we anticipate a call about debt every four minutes to the Money Advice Service helpline, and we expect the demand for debt advice to increase over the next 12 to 18 months due to the financial impact of the Covid-19 pandemic. Many people will need support for the first time but also may not know where to begin.”