The Office of Fair Trading (OFT) has warned a number of companies which provide individual voluntary arrangements (IVA) over their use of advertisements.
A number of adverts could “potentially mislead” consumers, the OFT states, leading the regulatory body to caution 17 IVA providers for being in breach of consumer credit licence holder guidelines.
Certain IVA companies have now been told to amend various statements such as “up to 90 per cent of your debt may be written off”, as the maximum was found to be in the region of 60 to 70 per cent.
In addition, providers now have to state fully issues regarding effects of an IVA on a borrower’s future credit rating and the inclusion of set-up and administrative costs.
Alan Williams, senior director of markets and projects services at the OFT, commented: “IVAs are still a solution for many, but those supplying them must be clear and honest about what they can and cannot achieve for consumers in debt.”
Widely regarded as an alternative to filing for bankruptcy, an IVA is a legal agreement through which a borrower can settle their debts with creditors.
However, one of the conditions of the contract is a compulsory remortgage in the fourth year of the agreement.
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