Warning over debt 'cold callers'

By Andrew Fletcher
BBC News

Consumer groups say IVAs are unsuitable for most debtors

Complaints about cold-calling by debt advice companies are to be investigated by the information watchdog.

Consumer groups say firms are urging people to take out Individual Voluntary Arrangements (IVAs) - a controversial alternative to bankruptcy.

The Information Commissioner's Office (ICO) says it has had a large number of complaints about automated phone calls.

The ICO says it is trying to find out who is making the calls, and will take action to stop them.

Large fees

The ICO says the calls refer to "government debt initiatives" or "debt reduction schemes".

Some talk of a "little known government loophole" to wipe out debts. Messages usually ask the recipient to press five for more information.

Consumer groups are concerned that the calls are coming from companies trying to sell IVAs.

National Debtline and the Consumer Credit Counselling say these are an effective solution for some people with serious debt problems, but often carry large fees and are unsuitable for most debtors.

People sometimes are desperate, and they'll jump onto the first lifeline that somebody throws them Becky Boden-Wilks National Debtline

Such claims made in 2007 by several companies which were subsequently ordered to withdraw their adverts for IVAs.

The Office of Fair Trading decided the claims were misleading, because in many cases IVAs are not the best solution for people with debt problems.

Under the EU Privacy and Electronic Communications Regulations of 2003, organisations should not make automated marketing calls unless they have prior consent.

Becky Boden-Wilks from National Debtline said the charity has helped people who have been mis-sold IVAs.

"People sometimes are desperate, and they'll jump onto the first lifeline that somebody throws them," she added.

In January 2008, the government set up a new code governing these arrangements - the IVA Protocol - which it was hoped would curb some of the aggressive marketing of IVAs.

This new way of selling them - by automated phone call - has raised concern among consumer groups that the wrong people are still being encouraged to take out IVAs.

The ICO says that anyone who receives one of these calls should try to get some specific information - the phone number it came from, or any company name which is mentioned.

Complaint forms are available to fill out on the ICO's website.