StepChange issues warning about online loan advertisers masquerading as them and advising people on debt solutions
People struggling with debt during the pandemic are being “fooled” by online loan companies claiming to help them.
StepChange, which offers free debt advice, claims it’s being spoofed online by companies that earn commission to set up repayment plans.
The charity has sounded the alarm after the latest government figures show a steep repayment failure rate on loans known as IVAs, suggesting that many deals are inappropriate and poorly sold.
“It is crucial, as we emerge from the pandemic period, that those struggling with a legacy of Covid debt are not inadvertently tricked into taking out an IVA through unscrupulous sales practices,” said Peter Wordsworth, manager. of Stepchange’s insolvency services.
Stepchange said he “called for a review of the personal insolvency landscape, to improve how it works for consumers and to ensure that regulation of this important but often overlooked industry is fit for purpose.”
The Insolvency Department, which is part of the Ministry of Business, also reported the problem, as a suspicious number of loan agreements terminate prematurely. Many individual voluntary agreements (IVAs), which typically last five years, are terminated after two or three years, recent official data shows.
StepChange calls for stricter regulation, as more than a fifth of IVAs taken out in 2018 have already been terminated. The organization urged people to be wary of credit agencies that make aggressive calls and pressure callers into costly deals.
The lockdowns have taken income from hundreds of big trouble sellers. Support The Big Issue and our suppliers by take out a subscription.
If you’re having trouble adjusting to a reduced income, we can help.
Find out how to manage your money if you’ve been on leave or seen your hours cut: https://t.co/WTRllvaFY0 pic.twitter.com/00dhBFtoZU
– Change of stage (@Change of stage) March 1, 2021
StepChange said it’s revealing that they’ve run fewer IVAs in the past year, mostly due to the pandemic, but overall the number of IVAs sold in 2020 was almost unchanged from to 2019, to over 78,000.
Peter Wordsworth, Head of Insolvency Services at StepChange, said bad publicity was “the driving force behind many online identity thefts by lead generators.”
He said: “IVAs are great for some people, but not all. We highly doubt that anyone who is sold an IVA should get one.
“Our own experience of having to deal with a large number of deceptive advertisers claiming to be StepChange in order to generate leads for IVA commercial sales, underpins this view.”