The Herald

Protected trust deed fears are revealed by survey

- 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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