Protected trust deed fears are revealed by survey
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.