Pro­tected trust deed fears are re­vealed by sur­vey

The Herald - - Business - SIMON BAIN

DEBTORS with ex­pe­ri­ence of Scot­land’s pro­tected trust deed sys­tem have reg­is­tered se­ri­ous con­cerns about its reg­u­la­tion, in a sur­vey by an in­de­pen­dent web­site.

The sur­vey of site users by Trust-Deed.co.uk fol­lows the re­cent Of­fice of Fair Trad­ing in­quiry into the £250 mil­lion debt man­age­ment sec­tor, and con­firms find­ings of an in­ves­ti­ga­tion by The Her­ald in July.

The OFT re­ported last month that too many debt man­age­ment com­pa­nies were em­ploy­ing in­com­pe­tent ad­vis­ers and hid­ing their fees – and warned 129 com­pa­nies to com­ply or be shut down.

It said debt ad­vice com­pa­nies ran mis­lead­ing ad­ver­tis­ing cam­paigns and sus­pect busi­ness mod­els, of­ten aimed at ex­tract­ing “the max­i­mum amount of money from a client re­gard­less of their cir­cum­stances”.

The new Scot­tish sur­vey found 47% of debtors re­port­ing they had been given mis­lead­ing or in­cor­rect ad­vice, and 48% say­ing they had read in­ac­cu­rate or mis­lead­ing in­for­ma­tion on Scot­tish debt ad­vice web­sites. More than a quar­ter re­ported that the ser­vice they had re­ceived from reg­u­lated com­pa­nies of­fer­ing pro­tected trust deed­shad been “poor” or “ex­tremely bad”.

Asked for their views on in­dus­try stan­dards, 94% agreed with tighter reg­u­la­tion and manda­tory pro­fes­sional qualificat­ions for debt ad­vis­ers, and 97% agreed that trust deed “agents” charg­ing un­nec­es­sar y front-end fees should be closed down.

How­ever, 89% of those who expressed an opin­ion said they felt a trust deed had over­all been the right choice, and only 18% felt that deeds do not strike a fair bal­ance be­tween debtors and cred­i­tors.

The sur­vey par­tic­i­pants typ­i­cally had (or have) very se­ri­ous per­sonal debt prob­lems, lead­ing to con­sid­er­a­tion of a for­mal in­sol­vency such as a pro­tected trust deed to deal with oth­er­wise un­man­age­able debt lev­els.

An­drew Grave­son, one of the web­site’s four qual­i­fied ad­vis­ers and a di­rec­tor of the Debt Res­o­lu­tion Fo­rum, said: “The pro­tected trust deed in­dus­try may have felt that the Of­fice of Fair Trad­ing’s re­cent crit­i­cisms of the debt man­age­ment in­dus­try were not their con­cern.

“This sur­vey con­firms the ex­is­tence of ex­actly the same prob­lems.”

He said many “ad­vice” web­sites pro­moted Scot­tish trust deeds but most em­pha­sised only the po­ten­tial ben­e­fits and failed to ment i o n po­ten­tially se­ri­ous draw­backs.

Mr Grave­son said some debt ad­vice “agents” charge a debtor high up­front fees to “process their case” be­fore sell­ing the po­ten­tial case to a real trust deed com­pany.

He said: “Such up­front ex­pense is en­tirely un­nec­es­sary for the debtor,will cause de­lays and po­ten­tial le­gal risks to them and of­ten leads to prob­lems later when mis­in­for­ma­tion from the agent comes to light.”

The Her­ald’s re­port high­lighted the case of in­sol­vent builder John Turner, who un­wit­tingly used such an agent and was sur­prised to be pre­sented later with a sep­a­rate bill for £500.

We also re­vealed how a high pro­por­tion of trust deeds pay noth­ing to cred­i­tors.

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