Cash scam too good to be true

Britain’s financial regulator is warning of a rise in unauthorised firms claiming to be able to wipe out people’s debts.

These companies offer to write off debts, mainly mortgages, and get compensation for consumers from their lenders. This might include reclaiming past payments of capital and interest.

The Financial Conduct Authority (FCA) says instances of such scams often increase in times of economic hardship and often target vulnerable people who are already struggling with money.

The FCA explained: “Almost all firms and individuals offering, promoting or selling claims management services in the UK must be authorised or registered by us.

“The firms offering these services are unlikely to be authorised by us and are targeting people in the UK. This is against the law.”

The FCA warns anyone using an unauthorised firm that they will not have access to the Financial Ombudsman Service in the event of a complaint.

They also will not be protected by the Financial Services Compensation Scheme if things go wrong. This means it’s unlikely they will get their money back if the firm fails.

If they stop making repayments on their debts, they could also face action from lenders. This could include debt recovery and repossession of their home.

The FCA added: “If a financial firm is authorised or registered it gives you greater protection if things go wrong. Check the Financial Services Register to make sure the firm is authorised and has permission for the service it’s offering you.

“If you have been contacted unexpectedly by a business or individual, make sure you call them back using the contact details on the Register.”