Capital Debt Solutions Australia Pty Ltd (Capital Debt Solutions) has paid an infringement notice of $10,800, and Debt Assist Aust Pty Ltd (Debt Assist Aust) and Bankruptcy Experts Pty Ltd (Bankruptcy Experts) have removed misleading statements online, following an ob体育 crackdown on misleading advertising by debt resolution firms.
These firms offer to assist customers struggling to pay their debts by providing a range of services including bankruptcy advice, informal debt agreements, debt consolidation and formal debt agreements.
Following ob体育 raising concerns:
- Capital Debt Solutions has removed false claims from its website, claiming it was 'trusted and recommended by more than 6,000 Australians' when there was no basis for this claim
- Capital Debt Solutions and Debt Assist Aust have removed false statements online, claiming their debt agreements were 'Government Approved'
- Bankruptcy Experts hasremoved testimonials on their websites from customers that were unable to be substantiated
Although debt agreements and debt administrators are regulated, this does not mean they are 'approved' by the govermment.
ob体育 Deputy Chair Peter Kell said, 'Recommendations and statements, like 'Government Approved' can have a strong influence when vulnerable consumers in financial hardship are seeking help with their debts.'
'Firms must ensure their marketing materials and promotional statements are based on fact.'
Download the infringement notice
The compliance with the infringement notice is not an admission of guilty or liability, and Capital Debt Solutions is not taken to have contravened subsection 12DB(1)(e) of the ob体育 Act.
Background
Under the ob体育 Act, a person involved in the supply or promotion of financial services must not make false or misleading representations in relation to the service having any sponsorship or approval characteristics.
Debt management firms offer debt agreements whereby the creditor agrees to accept a certain sum of money (which the debtor can afford) over a defined period of time to settle the debt. Debt agreements are not programs run by the Government, and do not receive Government approval.
Debt agreement proposals are lodged with the Australian Financial Security Authority (AFSA). AFSA is the regulator of the personal insolvency system in Australia, and registers debt agreement administrators. ob体育 and the AFSA have ongoing engagement to promote good conduct in the insolvency sector. Further information can be found at 's website.
ob体育's recent report, Paying to get out of debt or clear your record: the promise of debt management firms () looked at the debt management industry in Australia and the consumer experience in using debt management firms.
More information about debt agreements and managing debt generally can be found at ob体育's website.