The Australian Securities and Investments Commission (ASIC) has started a crackdown on misleading advertising by debt management firms, fining one and ordering others to remove false claims.
The 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.
Capital Debt Solutions was fined $10,800 for claiming on its website that it was ‘trusted and recommended by more than 6000 Australians’, when there was no basis for the claim. ASIC also ordered that the false claim be removed, and to take down a claim that its debt agreements were ‘Government Approved’.
Debt Assist Aust, another debt management firm, was also forced to take down a claim that its agreements were ‘Government Approved’, while the company Bankruptcy Experts had to remove testimonials from its website from customers that were not able to be substantiated.
ASIC explained that, while debt administrators are regulated, it does not mean they are ‘approved’ by the Government.
“Recommendations and statements, like ‘Government Approved’ can have a strong influence when vulnerable consumers in financial hardship are seeking help with their debts,” ASIC Deputy Chair Peter Kell said.
“Firms must ensure their marketing materials and promotional statements are based on fact.”
Under the ASIC 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.
Have you seen any misleading advertising regarding financial services? What action have you taken?