The Institute of Financial Planning (IFP) have released the results of a...
Seen Facebook ads about writing off debt? Get the facts first!
If you’ve logged on to Facebook recently, you may have noticed some very enticing adverts popping up in your feed. They talk about how the banks “no longer have the upper hand”, and that you, yes you, can finally put your debt behind you by doing what they say.
This is a pretty bold statement to make, considering that the companies putting these ads out know nothing about your financial situation.
The FCA have imposed strict criteria on the financial industry to make sure you’re treated fairly at all times. They also insist that all financial organisations behave in a way that’s clear and not misleading. The ads we’ve seen on Facebook would seem to break these rules.
Our job is to keep you in the know, so let’s take a look at the wording these ads use and why you need to be on your guard…
What they say: Britons with over £###### of debt can have ##% written off by paying £######.
Why this is wrong: without taking an in-depth look at your situation by means of a budget, there’s no way that an organisation can give you a suitable solution for your debts. I mean, come on…Britons? As in the entire nation? Since when was a debt solution ‘one size fits all’?
What they say: New Government legislation can help you write off ##% of your debt.
Why this is wrong: Firstly the ‘new’ legislation isn’t new at all. Writing off a percentage of debt normally means entering into a formal debt solution such as an individual voluntary arrangement (IVA) or bankruptcy. These debt solutions have both been around for quite a long time.
These solutions are usually not an easy way out and should never be simply offered without first understanding your situation. You also need to understand the risks as well as the benefits of these solutions if they’re ever recommended for you.
When the FCA outlined potential issues in the debt management market, one of their concerns was that people can sometimes make “quick, ‘distress’ purchases – (which) makes them more vulnerable to unfair or improper business practices.”
In plain English, this means that debt management companies shouldn’t be making grand promises like this without knowing your full situation. When you’re scared or vulnerable you might make snap decisions in order to make whatever’s worrying you go away, or even hand over money to some firm who barely knows anything about you.
We speak to many people who ask how to wipe out their debts in one go, but things are very rarely that simple. If a Facebook ad’s promise seems too good to be true, then trust your judgment. There’s a good chance it is.
For more information on where the ‘debts written off’ myth originated from, read our blogpost. In the meantime, if you’re struggling with debts, our online advice tool Debt Remedy can help you put together a personal action plan in around 20 minutes.